Price Gap or Slippage
Price Gap or Slippage in Forex Trading happens during high volatility periods; economic events or market news. During these periods, liquidity often disappear for a few seconds. And the price of a market instrument can jump (gap) from one level to another without trading in between.
For example, a trader places a BUY pending order at 1.1000 with Take Profit (TP) at 1.1020. However during a market news event, the market price jumps from 1.0990 to 1.1035 instantly. And the market never traded at 1.1000 (entry level), so the pending order never activated. The price simply skipped over the entry level. This is called Price Gap or Slippage in Forex Trading.
The price gapped above both the entry and TP, so the entry price was skipped, and the order never activated.
How to Avoid Price Gap?
• To avoid Price Gap or Slippage during news events, professional traders often use market execution after a market spike.
• Place pending orders farther away from the current price, avoid tight TP during news, and wait 10–30 seconds after economic news or market events.
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