Execution Quality & Slippage

Introduction

How well your order gets filled — at what price and how fast — is execution quality. Sometimes you get a worse price than expected; that's slippage. This lesson explains both.

Execution Quality

Execution quality covers:

• Price — how close to the best available price you fill
• Speed — how quickly your order executes
• Reliability — whether your order is filled as intended
• Cost — how much spread/slippage you pay

What Is Slippage?

Slippage is the difference between the price you expected and the price you actually got.

Expected: $50.00   Actual: $50.05   -> slippage $0.05

Slippage is usually negative (you pay more when buying, get less when selling).

When Slippage Gets Worse

• High volatility — prices move between order and fill
• Low liquidity — few traders means bigger price impact
• Large orders — moving the market against you
• Market orders in fast markets

How to Reduce It

• Use limit orders to cap the price you'll accept
• Trade liquid securities with tight spreads
• Avoid trading during violent news spikes
• Keep order sizes reasonable relative to liquidity

Real-World Example

You place a market order to buy during a news spike. The price jumps between your click and the fill, so you pay $50.12 instead of $50.00 — $0.12 slippage. A limit order at $50.05 would have capped your cost.

Summary

• Execution quality = how well an order is filled (price, speed, reliability)
• Slippage = difference between expected and actual fill price
• It worsens with volatility, low liquidity, and large orders
• Limit orders and liquid assets reduce slippage
• Watching execution quality keeps your real costs low

Next Lesson

Order conditions: time-in-force and flags.