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Slippage Policy

What is slippage? Why slippage?

WHAT IS FOREX SLIPPAGE?

When you’re trading Forex, sometimes you’ll notice a slight difference between the price you expect and the execution price (the price when the FX trade is completed). When this happens, it’s known as slippage. It’s a common thing to experience as a Forex trader and it can work either positively or negatively.

The main reasons for slippage are Forex market volatility and execution speeds. When a market experiences high volatility it generally means there’s low liquidity and market prices fluctuate very quickly. Where this affects Forex traders is when there’s not enough FX liquidity to fill an order at the requested price. When this happens, the liquidity provider will complete the trade at the next best price.

Another cause for slippage is execution speed. This is how fast your Negative Spread can complete your trade at the price you want it to. With market prices changing in fractions of a second, having faster execution times can make a difference, especially on large trades.

Examples of Forex Slippage

Say that the price of the AUD/USD was 0.9010. After analyzing the market, you speculate that it’s on an upward trend and long a one standard lot trade at the now current price of AUD/USD 0.9050, expecting to execute at the same price of 0.9050.

The market follows the trend but goes past your execution price and up to 0.9060 very quickly – within a second. Because your expected price of 0.9050 is not available in the market, you’re offered the next best available price. For the sake of the example, that price is 0.9045. In this case, you would experience positive slippage:
0.9050 – 0.9045 = 0.0005, or +5 pips.

On the other hand, let’s say your trade was executed at 0.9055. You would then experience negative slippage:
0.9050 – 0.9055 = -0.0005, or -5 pips.

It’s important to note that slippage can occur with all types of requested orders including Stop Loss, Take Profit, Buy/Sell Stops and Buy/Sell Limit Orders. As MIC FX uses market execution, we cannot guarantee such orders.

We operate under Market Execution and for this reason, we are unable to fill a Forex order that no longer exists. If your requested price is no longer available, your order will be filled by our FX liquidity providers at the going market rate.

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Multi Investment Company Ltd (“MICFX”), is authorized and regulated by the Financial Services Authority St. Vincent and the Grenadines (the “SVGFSA”).

Risk Warning: Our products are traded on margin and carry a high level of risk and it is possible to lose all your capital. These products may not be suitable for everyone and you should ensure that you understand the risks involved.

High Risk Trading Warning: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.


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