How To Eliminate Slippage!!!

[jgerousis]

[Today's tip will be about slippage! Many traders if not all have experienced slippage. Slippage is a very annoying thing, as your fill price would be different from your order price. Slippage usually occurs when there is low liquidity and / or when there are very important market news, such as the NFP.

Now, not all brokers are honest! Some brokers usually have the ability to fill your orders at the required price. But they don't! Your on-screen account will have a fill with slippage, while the real fill would be on the same required price; and the broker will put the extra income in his pocket! Now there is no way to detect such fraud. Because you never know what your broker is up to. I have heard stories from people having different account at different brokers, where they put two same orders at two different brokers. To their surprise, one broker filled their order at the require price, the other at 55 pip slippage! After contacting the broker, and explaining this, he replied that different brokers have different pools, and it is not guaranteed that the fill will be the same! Come on! If it was 5 pip or even 10 pip, we would have believed that. But 55 pips? come on!

Now here is another horror story about slippage, which happened with me! I had an account at broker x, and a friend of mine another account at same broker x. We put same orders, because we use same trading system. To our surprise, my friend called me and told me he had slippage of 20 pips. Me did not! Now this is something extraordinary! Same broker, same orders, same quantities, but different account holders, each had a different fill. It could happen, no one knows. But, would you believe that? would you continue working with such a broker?

Slippage Elimination

There are two main ways to eliminate slippage, while still putting your orders and still trading the news.

1. Most brokers have the option of max slippage, where in the preferences, or in order box, you can state exactly how is the max price you are ready to pay to take the order. The max would be entered in pips. For example, you put +-10 pips. Which means that if the fill is not in the range of +-10 pips from the required price, the order would not be filled.

2. Another tactic, which I discovered myself, is, trying to break up your order into smaller pieces. For example, if you trade 1 lot, try to break your order into 4 equal parts, each part with 0.25 lot, or 5 small parts. If you have 2 lots, break them into 0.5 lots each part. Now this trick, will fool the computer systems and robots in one hand (for brokers who target certain traders who trade big sizes), or / and will allow your broker, (for honest brokers), to match your orders more easily with other traders from the pool, and will fill your orders more easily are required prices. (Try it)