What factors can cause Slippage?
Slippage in the context of Contracts for Difference (CFDs) can generally be attributed to various factors:
- Market volatility: High volatility can lead to rapid price movements, making it difficult for orders to be executed at the requested price.
- Market liquidity: When there are not enough buyers or sellers at a specific price point, it can be challenging to execute orders without incurring slippage.
- Order size: Large orders can cause slippage because they may not be fully filled at the desired price. The market may lack sufficient liquidity to accommodate large trades without price movement.
- News events: Unexpected news, such as economic reports or geopolitical developments, can lead to sudden price spikes or drops.
- Market gaps: Overnight or weekend gaps can result in slippage, as orders can only be executed when there is an available price in the market.
