Trade Like the Professionals
The orders you send to your broker will tell him the price at which you want him to buy and sell commodity contracts on your behalf.
Price Slippage - what is it?
But frequently, when your order is executed, you will find that the price is less favourable than the one you requested.
The reason is price slippage.
Perhaps the price at which you wanted to sell was never available because the market price skipped right over the one you wanted. You had no alternative than to accept a lower price.
When markets are vigorous and the price is moving fast, it is a matter of luck to some extent, exactly where you manage to get in and out of them.
The important thing about price slippage is that you should make allowance for it in your historical system testing - otherwise the results you produce will not be as realistic as they need to be.
Price slippage is one of the inevitable costs of commodity trading.
Copyright David Bromley 2006
All Rights Reserved.
David Bromley helps
new and aspiring systems
traders establish a complete
trading method to compete
with the professionals