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Asymmetric Slippage

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Asymmetric slippage is when your broker handles orders differently according to whether the market has moved in your favor or against you.

Slippage is the difference between the expected price of a trade and the price the trade is actually executed.

Markets can move in milliseconds, meaning the price you click to trade on may have changed by the time your order reaches your broker.

Slippage can occur for a number of different reasons and can work for and against a trader.

Asymmetric slippage involves a broker passing negative price movements to you but seeking to capture positive slippage itself by only giving you the original quoted price where a positive movement for the broker has occurred in the intervening time between a quote being provided and the execution of the order.

Asymmetric price slippage is different in the sense that traders are prevented from taking advantage of price improvements, with slippage only occurring when it works against the trade.

This practice is illegal. Firms that fail to pass on improvements in execution prices are in breach of both U.S. and European regulation.

Brokers that aren’t regulated in jurisdictions with a tough regulatory agency may be more inclined to not pass on positive slippage to traders.


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