Execution quality: slippage, latency and spreads
In this lesson you'll learn
- Where execution costs hide
- How to measure your own execution
- How to reduce slippage and delays
The cost you don't see on the chart
Between the price you want and the price you get sit spread, commission, slippage and latency (delay). For long-term trades these are small; for short-term strategies they can be the difference between profit and loss.
Slippage
Slippage is the difference between the requested and the filled price. It happens when price moves before the order fills: in fast markets, at news, or with large orders in thin markets. It can be positive or negative; a fair broker passes both.
Measure it
- Record the price when you clicked (or the signal price) and the fill price.
- Compare across times of day, symbols and brokers.
- For copied trades, compare the master's fill with the follower's fill.
Reducing it
- Avoid market orders at news releases and session opens.
- Use limit orders where your strategy allows.
- Trade the most liquid symbols at their most liquid hours.
- For automated systems, run them close to the broker's servers (a VPS) to cut latency.
Try it
💸 Trading cost calculator
Cost of the trade
Cost in pips
Share of the target
Common mistakes
- Ignoring slippage in backtests of short-term strategies.
- Using market orders at the exact second of news.
- Comparing brokers by spread only.
How this works when you copy trades
When copying, the follower's fill depends on its own broker and the copy delay. Goldman Copier records copy timing, so you can compare master and follower prices.
Check yourself
1. Slippage is…
2. Which reduces slippage?
3. Execution costs matter most for…
Key takeaways
- Spread, commission, slippage and latency are all execution costs.
- Measure your fills; don't assume them.
- Liquid times, limit orders and low latency reduce costs.
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Education, not advice. Goldman Academy teaches how markets and tools work. Nothing here is a recommendation to buy or sell, and no lesson promises profits. Trading leveraged products carries a high risk of losing money; only trade money you can afford to lose. · Written by Goldman Academy, reviewed by Faisal