Slippage is the difference between the price you expected to pay (or receive) for a trade and the price you actually get when the order is filled. It happens most often during fast-moving markets or around major news events, and most Australian CFD and forex traders will experience it at some point.
How Slippage Works — A Practical Example
Imagine you place a buy order on AUD/USD at 0.6500. By the time your broker executes the order, the price has moved to 0.6503. You’ve been filled three pips higher than intended — that’s slippage of 0.0003, working against you.
On a standard lot (100,000 units), three pips of slippage on AUD/USD equals roughly A$30 of extra cost you didn’t plan for. That might sound small, but if you trade frequently or use tight stop-losses, slippage can meaningfully erode your results over time.
Slippage can also work in your favour. If the market moved to 0.6498 before your order filled, you’d get a better price than expected — known as positive slippage. In practice, negative slippage is far more common during volatile conditions.
Why Slippage Matters for Australian Traders
ASIC-licensed brokers are required to achieve best execution for retail clients, meaning they must take reasonable steps to get you a price that’s as close to fair market value as possible. However, best execution doesn’t guarantee zero slippage — it simply means the broker shouldn’t be deliberately filling you at worse prices to profit at your expense.
Where slippage becomes a serious concern is around stop-loss orders. If you set a stop-loss on an ASX 200 CFD position at 7,500 and the index gaps down to 7,470 on open, your order may fill at 7,470 — 30 points below your intended exit. This is called a gap, and it can turn a controlled loss into a much larger one than you planned.
Some brokers offer guaranteed stop-loss orders (GSLOs), which protect you from gap slippage for a small premium. ASIC’s leverage caps mean Australian retail traders already have some downside protection, but GSLOs add another layer. It’s worth checking whether your broker offers this feature before trading volatile assets like oil, crypto, or individual ASX shares.
Slippage vs Spread — What’s the Difference?
The spread is the fixed (or variable) gap between the buy and sell price that you pay on every trade, regardless of market conditions. Slippage is an additional, unpredictable cost that occurs when your order can’t be filled at the quoted price. Both eat into your profit, but the spread is visible before you trade while slippage only shows up after. For most Australian traders, checking the spread upfront is straightforward — but slippage during news events is the more important factor to check through real execution data.
What to Check When Comparing Brokers
- Execution speed and fill rates: Look for brokers that publish average execution speeds. Faster execution means less time for the market to move between your order and your fill, reducing slippage risk.
- ECN or STP execution models: Brokers using Electronic Communication Network (ECN) or Straight-Through Processing (STP) routing tend to have lower slippage than market makers, as orders go directly to liquidity providers. IC Markets is a well-known ASIC-licensed ECN broker that consistently ranks well for execution quality.
- Guaranteed stop-loss orders: Check if the broker offers GSLOs, especially if you plan to trade volatile instruments like commodities or crypto CFDs.
- Slippage during news events: Some brokers widen spreads or delay fills around major releases like RBA rate decisions or US Non-Farm Payrolls. Read third-party reviews to see how a broker behaves in these conditions.
- Order types available: Limit orders fill at your specified price or better, so they effectively eliminate negative slippage. A broker offering a full range of order types gives you more control over your entry and exit prices.
See our picks for the best forex brokers in Australia — all ASIC-licensed, all live-tested by our team.
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