Negative slippage in forex refers to a situation where an order is executed at a price less favorable than the one originally requested by the trader. It occurs when market conditions change rapidly, leading to a discrepancy between the requested price and the actual execution price. This phenomenon is common during periods of high volatility, low liquidity, or when there is a sudden news event impacting the financial markets.

For instance, if a trader places a market order to buy a currency pair at a specific price, but by the time the order reaches the market, the best available price has moved unfavorably, the trade may be executed at a higher price than expected. This results in negative slippage, leading to potential losses for the trader.

While slippage is a natural part of trading, negative slippage can be problematic for traders, as it erodes profit margins and can impact overall trading performance. To minimize the risk of negative slippage, traders may use limit orders or other risk management tools to specify the maximum acceptable deviation from the requested price at the time of order execution.

Negative slippage in forex occurs when an order is executed at a worse price than expected, usually due to high market volatility or low liquidity. For example, if you place a buy order at 1.1000 but the market moves rapidly, your trade might fill at 1.1010, increasing your cost. This often happens during major news events, sudden price gaps, or in fast-moving markets where liquidity is insufficient to match orders at the desired price. While brokers strive to execute trades accurately, extreme conditions can lead to slippage. Negative slippage increases trading costs and can impact profitability, especially for scalpers and high-frequency traders. To minimize it, traders can use limit orders, avoid trading during high-impact news, or choose brokers with deep liquidity pools.