Why does slippage occur on Exness MT4 and MT5 accounts?
Slippage might be costing you a lot when trading Forex. Here is what you need to know about slippage.
Slippage happens in every financial market not only limited to Forex markets but also Stocks, Metals, Oils, and more markets.
Does slippage occur on Exness’s Forex trading accounts?
Slippage refers to the inconsistency between the actual transaction price and your set price in financial transactions.
There are 2 types of slippage in the market.
- Positive Slippage
- The closing price is better than the setting price.
- Negative Slippage
- The transaction price is worse than the set price.
Slippage can occur in all financial markets, whether trading stocks, futures, foreign exchange or commodities.
Essentially, financial transactions are about matching buyers and sellers.
When the prices and quantities of the two parties do not match exactly, slippage occurs.
The condition is the same for Exness.
On Exness MT4 and MT5 platforms, the slippage can happen as a positive slippage and negative slippage depending on the direction of the market movement.
How Slippage occurs in markets
Specifically, let’s look at two situations:
1. The set price does not appear
For a simple example, suppose you plan to buy 10 kg of beef at a price of 100 USD based on experience, and when you arrive at the supermarket, you find that the price is 105 USD.
At this time, you can accept the new price or cancel the purchase.
If you choose to accept the new price, it is essentially a kind of slippage, because the transaction price is inconsistent with the expected price.
Unlike the example of buying beef, depending on the type of order, an order in a financial transaction may not be canceled, but only the option to accept the latest market price.
2. The set price has appeared, but the transaction volume is insufficient
Still taking the purchase of beef as an example, suppose there is 1 kg of beef priced at 100 USD when arriving at the supermarket, but the purchase limit is 10 kg, first come first served, and the price will return to 105 USD after the sale is sold out.
There are already many customers who are making purchases, and you have also joined the queue.
In this case, there is no guarantee that you can buy beef at a price of 100 USD, because the limited purchase may have been sold out when it is your turn.
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Example of Negative Slippage on Exness’s platform
Let’s say you bought 100 shares of Apple inc at a price of $55, and set a stop loss at a price of $50.
The stock price fell in the market outlook. When it fell to the price of $50.5, the next buying price jumped directly to $49.5.
The stop loss is triggered and the trade is made at the more unfavorable price of $49.5.
The preset stop loss for this transaction is 100 * (55-50) = $500, and the actual loss is 100 * (55 – 49.5) = $550, so you lost an additional $50 due to slippage.
In this case, slippage occurs when the set price is gapped or there is not enough liquidity.
Example of Positive Slippage on Exness’s platforms
You places a buy order of 1 lot (100 ounces) when the gold quotation was $1910 per ounce, and set a limit price of $1920.
The price rises in the market outlook. When it rises to $1919, the next quotation jumps directly to $1923.
The limit price is triggered and executed at the more favorable price of $1923.
The preset take profit for this transaction is 100 * (1920-1910) = $1000, and the actual profit is 100 * (1923-1910) = $1300, because of the slippage you gained an additional $300 in profit.
Quotations of financial products are rarely completely continuous.
Taking gold trading as an example, its quotations are accurate to the second decimal place.
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The maximum range of Slippage on Exness
Many people may have a question, how much slippage is a reasonable range?
Although the slippage is relatively small in most cases, in extreme market conditions, a large slippage may occur.
Taking the famous negative oil price event in recent years as an example, on April 20, 2020, the WTI crude oil May contract plummeted from nearly $20 at the opening to the lowest near negative $40.
Under normal market conditions, the price change of WTI crude oil is in units of 0.01 USD.
On the day when the negative oil price appears, the instantaneous price change can be as high as 30 US dollars, that is, the slippage of trading crude oil at that time can be as high as 30 USD.
The range of the slippage is not controlled by the Exness or the platform, but determined by the market.
How to avoid slippage risk?
Slippage cannot be completely avoided in financial transactions, especially in the following situations, the probability of slippage and the range of slippage will be greater:
1. Release time of important financial events
For example, when a country releases important economic data or a listed company releases financial reports, if the result deviates from market expectations, it will lead to sharp price fluctuations in a short period of time, and the amount of slippage is likely to be greater.
2. Holding positions on weekends
Most financial markets are closed on weekends.
However, events that affect the price of financial assets may still occur on weekends.
Therefore, when the market opens every Monday, it is the time when gaps and slippage most often occur.
3. Periods of low liquidity
For global trading products such as foreign exchange, index, and crude oil, when the U.S. session is switched to the Asian morning trading time, especially around 17:00 U.S. Eastern Time, the liquidity of the market is greatly reduced due to the scarcity of participants, and slippage occurs more likely at this time.
For traders with low risk appetite, avoiding transactions and holding positions in the above three periods can minimize the probability and level of slippage risk.
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How to trade with positive slippage on Exness?
Positive slippage allows a trader to gain extra profit and it usually appears in limit orders.
When traders place pending orders, they should set limit pending orders instead of stop loss pending orders, which can avoid negative slippage to the greatest extent and obtain positive slippage most likely.
There are two types of limit pending orders:
- Buy Limit
- Place a pending order to buy at a price lower than the market price.
- Sell Limit
- Place an order to sell at a price lower than the market price.
Choose a broker that offers positive slippage
As a formal global regulated online broker, Exness treats each customer fairly.
Depending on the order type and market conditions, customers may encounter negative slippage or positive slippage.
Choose Exness as your broker to trade global financial assets including US stocks, crude oil, gold, foreign exchange, indices and cryptocurrencies.
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How to distinguish between positive and negative slippage
Depending on the style of trading, traders may experience slippage on a regular basis.
When encountering a large slippage, how to confirm whether it is normal?
Open the 1-minute candlestick chart of the trading platform you are using, and check whether the length of the candlestick line at the minute when your order execution slips is significantly longer than the candlestick line before and after.
If so, it can basically be confirmed that it is caused by market fluctuations.
Take the 1-minute chart of gold on August 26, 2022 as an example.
In the red box above, there are several candlestick lines that are significantly longer than other lines.
At that time, Federal Reserve Chairman Powell’s speech caused violent shocks in the financial market, and gold fluctuated violently in the tens of dollars within a few minutes.
Obviously, the gold orders executed during the period may encounter large slippage.
If the first step cannot confirm whether it is a normal slippage caused by market fluctuations, you can apply to the platform broker for transaction order execution query, and the broker will check for you whether your transaction execution is normal.
Although most slippages are caused by market fluctuations, in a few cases it may also be a technical problem of the broker.
In this case, a reasonable solution will usually be given after confirmation by the broker.
Which Exness’s account is the best?
Not sure which of Exness’s Forex accounts is best for you? Let us guide you to the right direction.
Whether you are a veteran or new to the forex market, the question of which account to choose is one that we all encounter frequently.
In fact, different traders have different needs. With that in mind, we’ve created a series of guides to help you choose the perfect match.
We are here to provide a handy guide so you can compare and contrast all account types to choose the one that’s right for you.
Exness offers 4 main account types:
- Cent account
- Mini account
- Classic account
- ECN account
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Who should use Exness Cent Account?
Exness Cent accounts allow their owners to trade currencies in lots denominated in cents instead of dollars.
This means that even those with small investment amounts can use them.
At Exness, you can open an account and trade with as little as $1.
Cent accounts are also a good option for those who want to test a strategy, EA or idea under real market conditions before committing large amounts of money.
- Low deposit requirements.
- Designed for novice traders.
- You can trade with smaller trading units (micro lots).
- Orders will be executed at market prices (no requotes).
- Stable spread.
- Reliable execution.
- No transaction commission.
Who should use Exness Mini Account?
Exness Mini Accounts are truly powerful accounts.
While its highly competitive features and trading conditions make it ideal for sophisticated traders, its low requirements for account opening and trading make it ideal for new traders.
- Up to unlimited leverage means you only need to deposit a small amount to open large positions.
- As low as 1 USD to open an account, trade as low as 0.01 lots.
- No commissions or hidden fees for transactions.
- Trade over 120 currency pairs, precious metals like gold and silver, and even cryptocurrencies like Bitcoin.
Is a Mini Account Right for You? Sign up now and start trading today.
While the mini account requires very little capital to trade, budget-conscious forex traders can trade smaller amounts on the Exness Cent account.
Who should use Exness Classic Account?
The Exness Classic account is specially designed to meet the needs of experienced and professional traders.
Built for traders on a larger budget, the Classic account features unlimited leverage, the tightest spreads Exness offers, no fees or commissions, and virtually no limit to the number (or types) of trades you can place.
- Cost Efficiency:
- Starting at 0.1 pips, Classic accounts have the tightest spreads Exness offers, with no fees or commissions.
- Few restrictions:
- There are no restrictions on the types of orders and executions you can use, and there is a large limit on the maximum position size.
- Trade over 120 currency pairs, precious metals like gold and silver, and cryptocurrencies like Bitcoin and Litecoin. Trade the way you want, with the tools you want.
The Classic account requires a $2,000 minimum deposit to open and has a larger minimum position size to trade than other Exness accounts.
If you have a smaller budget, you may consider an Exness mini or cent account.
Who should use Exness ECN Account?
Exness ECN accounts are designed for Forex traders looking for the lowest possible spreads.
In exchange for standard commissions, traders with ECN accounts receive their currency prices directly from the interbank market.
This means transparency of pricing, the lowest spreads of any Exness account, and a high degree of anonymity.
- Direct Access:
- Allows direct access to the interbank market.
- Very low spreads:
- Starting from 0.0 pips, ECN has the lowest spreads among all Exness accounts.
- The ability to open a position as small as 0.01 lots makes your transaction costs lower.
- When trading with ECN, your orders are highly anonymous and go directly to the market.
ECN accounts do charge a commission of $25 per million traded. If you want to trade commission-free, you may consider Mini, Cent or Classic accounts.
While Exness’s ECN accounts offer leverage up to 1:200, other Exness accounts offer higher leverage. If you’re looking for high leverage, you may consider Exness Mini, Cent or Classic accounts.
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