How Futures Traders Can Avoid Slippage

No matter how experienced you are as an investor, there’s a good chance that you’ve been the victim of slippage at some point in your career. Slippage occurs when the entry or exit price of a trade is different than what you were expecting. For instance, imagine you are processing a deal through an online exchange the price increases by five cents in the time it takes to be filled. If you’re purchasing 1,000 shares, slippage will cause you to pay an additional $100. 

Fortunately, there are two key strategies that traders can implement to reduce the impact of slippage. Traders will either develop advanced trading strategies or will look to streamline their technological infrastructure. However, although these are the two most common methods used to avoid slippage, they are not the only two ways in which its possible.

Understanding Your Trading Strategy Can Help You Avoid Slippage 

If you are interested in long-term holdings, then slippage should not be a primary concern. For instance, if you’re depositing money into a Roth IRA, the difference of a few cents won’t matter much in the long run. However, if you’re participating in the live market, the slippage could cut down on your ability to be successful as a trader.

One of the reasons for this is because of volatility. Investors should make sure they understand the depth-of-market of a product, as well as its activity levels. For example, a product with elevated activity levels will subject traders to slippage more than an asset that is not as popular. If possible, investors should look to participate in markets that are liquid and not volatile.

Your trading strategy also comes into play when it comes to inefficient order types. If you are an investor trading frequently, you should know that the cost of using market and stop-market orders as a means to enter and exit a market can add up quickly. Filling an order at the “best available price” can often be much different than the ideal price that a trader had in mind.

Lastly, those with high trade frequencies and small profit targets are likely to be most impacted by slippage. By placing high-volume trades, investors are likely destined to underperform. Traders participating in this strategy will need to take significantly more steps to maximize their efficiency.

Understanding How Broker-Side Options Could Increase Efficiency 

Another way to help reduce the risk of slippage is by working with a reputable broker. Investors should look to find a reputable brokerage that meets their trading goals. Some brokers tailor their services explicitly to help investors who are concerned about slippage. Brokers also provide direct market access. Not having to route trades through an intermediary should help streamline the transaction, providing a more accurate price point.  

Slippage Doesn’t Have To Be Your Downfall 

Slippage has burned even the most experienced of investors, but it doesn’t have to be your downfall. If you have a sound technical understanding of your trading strategy, you’ll be in a much better position for success. Hiring a brokerage could also be an investment well worth making.


US LAW requires trading and trading education accompanied to post legal disclaimers as to market and personal performance, as well as investment risk. Please carefully read and study the Legal section of this website and any agreement you sign. Any agreement to doing business with SP500Trader.com website or Delta Trading Group, Inc is verification that you have read, understand, and agree to the terms of risk associated with futures trading and financial investing as described.

Important Futures Trading Disclaimer

Trading futures and options involves the risk of loss. Please consider carefully whether futures or options are appropriate to your financial situation. Only risk capital should be used when trading futures or options. Investors could lose more than their initial investment. You must review customer account agreement prior to establishing an account.

Past results are not necessarily indicative of future results. The risk of loss in trading can be substantial. Carefully consider the inherent risks of such an investment in light of your financial condition. Though proper education, tools, and practice are necessary, they do not guarantee profitable results. 

Education Oriented

SP500Trader.com and the Delta Trading Group, Inc. are educational entities; be sure to consult with your financial advisers, brokers, and other professional services about the risk of trading. Though we offer a common language to learn about trading and risk, we are not a signal service. You must use your own discretion when doing any kind of trading in any financial market. SP500Trader.com and the Delta Trading Group, Inc. are not responsible for interpretation, opinions, or losses by its members, liaisons, instructors, mentors, vendors, contractors, or administration, as none of these entities can guarantee your success. 

Internet Trading Risks

There are risks associated with utilizing an Internet-based deal execution trading system including, but not limited to, the failure of hardware, software, internet connection, or services provided by third parties. Since SP500Trader.com and the Delta Trading Group, Inc do not control vendor signal power, its reception, or routing via Internet, configuration of your equipment or reliability of its connection. We are not be responsible for communication failures, distortions, or delays when trading via the Internet. 

Accuracy of Information

The content on this website is subject to change at any time without notice, and is provided for the sole purpose of assisting traders to make independent investment decisions. SP500Trader.com and the Delta Trading Group, Inc have taken reasonable measures to ensure the accuracy of the information on the website. The company does not guarantee its accuracy, and disclaims liability for any loss or damage which may arise directly or indirectly from the content or your inability to access the website, for any delay in, failure of the transmission, or the receipt of any instruction or notifications sent through this website.

Distribution

This site is not intended for distribution, or use by, any person in any country where such distribution or use would be contrary to local law or regulation. None of the services or investments referred to in this website are available to persons residing in any country where the provision of such services or investments would be contrary to local law or regulation. It is the responsibility of visitors to this website to ascertain the terms of and comply with any local law or regulation to which they are subject.

Slippage

Your broker may have a contractual agreement not to seek redress for slippage, it’s obligation to execute stop loss orders at the stop loss price or better, will not apply to limit and stop loss orders during hours when it is closed. This also does not include bad price spikes. Bad price spikes are removed from the price charts quickly to alleviate confusion.

Make Price Action Trading Work For You

If you’re a day trader, you probably know that price action strategies can allow you to turn a profit quickly over a short period of time. If you’re just getting into day trading, you might still be wondering how to make price action trading work for you. When it comes to this trading technique that allows a trader to read the market and make subjective trading decisions based on the recent and actual price movements, there’s no such thing as too much information.

The Tools Of The Trade

Price action trading ignores the fundamental analysis factors and puts more focus on recent and past price movement, making it a strategy that’s dependent on technical analysis tools. Since it relates to recent history and past price movements, some of the best tools include:

  • Charts
  • Trend Lines
  • Price Bands
  • High and Low Swings
  • Technical Levels (support, resistance, and consolidation)

Other tools and patterns that are observed by the trader can be as simple as:

  • Price Bars
  • Break-Outs
  • Complex Combinations

The trader can also use personal psychological and behavioral interpretations and actions as tools in price action trades. While a technical analysis scenario (like 15 DMA crossing over 50 DMA), can spark a similar response and behavior in multiple traders, it is unlikely that two traders will ever interpret a certain price action trade in the same way. Each will have their own set of interpretations, rules, and behaviors of understanding.

Taking Steps To Price Action Trading

Any trader can use price action trading tools and techniques. It’s an approach that uses predictions and speculation, making it useful to retail traders, speculators, arbitrageurs, and trading firms. It can be used on a wide range of securities such as equities, bonds, forex, commodities, and more.

Most traders follow a two-step process to find patterns and opportunities. First they identify a scenario, then they identify the opportunities within the scenario. For example, if a stock is getting into a bull phase, it’s likely to either overshoot or retreat, giving the trader a subjective choice that can vary from one trader to the next. Price action trading can rely greatly on technical analysis tools, but the individual trader makes the final call, which allows for flexibility instead of a strict set of rules that must be followed. 

Why Is Price Action Trading So Popular?

Price action trading is discouraged for long-term investments, but works better for short-to-medium term profit trades that are limited. Many traders view the market as following a random pattern, giving them no opportunities to define a strategy that will work in every scenario, every single time. But combining the technical analysis tools with recent price history to identify trade opportunities based on personal interpretation makes price action trading a popular way to come close. Though trading can provide a good opportunity for a profitable outcome, it’s the trader’s responsibility to understand, select, and decide upon what actions will meet the requirements to do so.

TRADING DISCLAIMERS

US LAW requires trading and trading education accompanied to post legal disclaimers as to market and personal performance, as well as investment risk. Please carefully read and study the Legal section of this website and any agreement you sign. Any agreement to doing business with SP500Trader.com website is verification that you have read, understand, and agree to the terms of risk associated with futures trading and financial investing as described.

Important Futures Trading Disclaimer
Trading futures and options involves the risk of loss. Please consider carefully whether futures or options are appropriate to your financial situation. Only risk capital should be used when trading futures or options. Investors could lose more than their initial investment. You must review customer account agreement prior to establishing an account.

Past results are not necessarily indicative of future results. The risk of loss in trading can be substantial. Carefully consider the inherent risks of such an investment in light of your financial condition. Though proper education, tools, and practice are necessary, they do not guarantee profitable results.

Education Oriented
SP500Trader.com and the Delta Trading Group, Inc. are educational entities; be sure to consult with your financial advisers, brokers, and other professional services about the risk of trading. Though we offer a common language to learn about trading and risk, we are not a signal service. You must use your own discretion when doing any kind of trading in the any financial market. SP500Trader.com and the Delta Trading Group, Inc. are not responsible for interpretation, opinions, or losses by its members, liaisons, instructors, mentors, vendors, contractors, or administration, as none of these entities can guarantee your success.

Internet Trading Risks
There are risks associated with utilizing an Internet-based deal execution trading system including, but not limited to, the failure of hardware, software, internet connection, or services provided by third parties. Since SP500Trader.com and the Delta Trading Group, Inc do not control vendor signal power, its reception, or routing via Internet, configuration of your equipment or reliability of its connection. We are not be responsible for communication failures, distortions, or delays when trading via the Internet.

Accuracy of Information
The content on this website is subject to change at any time without notice, and is provided for the sole purpose of assisting traders to make independent investment decisions. SP500Trader.com and the Delta Trading Group, Inc have taken reasonable measures to ensure the accuracy of the information on the website. The company does not guarantee its accuracy, and disclaims liability for any loss or damage which may arise directly or indirectly from the content or your inability to access the website, for any delay in, failure of the transmission, or the receipt of any instruction or notifications sent through this website.

Distribution
This site is not intended for distribution, or use by, any person in any country where such distribution or use would be contrary to local law or regulation. None of the services or investments referred to in this website are available to persons residing in any country where the provision of such services or investments would be contrary to local law or regulation. It is the responsibility of visitors to this website to ascertain the terms of and comply with any local law or regulation to which they are subject.

Slippage
Your broker may have a contractual agreement not to seek redress for slippage, it’s obligation to execute stop loss orders at the stop loss price or better, will not apply to limit and stop loss orders during hours when it is closed. This also does not include bad price spikes. Bad price spikes are removed from the price charts quickly to alleviate confusion.

Delta Trading Group Video: Recapping a live trading session

In this video Dr. Clifford Vance Cast recaps a double bar and a pivot point indecision signal during a live trading session. This is a great video as he walks the viewer through the decision making process while analyzing the trends and the data from the program.

Watch this lesson video here