Concept What is Slippage? What causes Slippage? This is all information that many investors wonder about. Because the Slippage situation when trading is no longer strange to many investors. However, what is the cause of this situation and how to handle it, what trading strategy should you use? Let Forex Trading find the answer right now.
What is Slippage? Detailed analysis of price slippage on forex
In the foreign exchange market, the occurrence of Slippage will affect investors’ profits.
Basics What is Slippage?
In financial investment, what is slippage? This is a phrase to refer to the act of price slippage in the investment market. Slippage will occur when a trade order has been matched at a price. However, this matching price is different from the price the investor placed the order.
Take a simple example when an investor places an order to buy EUR/USD and places the order at 1.2300 points. However, when the order was matched, the investor saw that his order was placed at 1.2305 points. This means the market has slipped in price and the investor is 5 pips away.
What causes the condition What is Slippage?
The causes of price slippage include two reasons. The first is due to the influence of too strong market fluctuations. Once the market fluctuates strongly, whether positive or negative, it will affect order placement.
The next reason is that the market liquidity is not strong enough. This is the same as when investors trade on the CEX exchange. Investors will discover that the buying side and the selling side only have a few ETH. If an investor wants to sell 1000 ETH at the same time, the market price will drop sharply.
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What is Oscillator? Analyze MT4 indicators with the Oscillator indicator
What is an Oscillator? This is an oscillating indicator at specific price levels. These prices will fluctuate depending on different times. This is not a name for a separate indicator. They are used to refer to a group of indicators in non-trending markets.
What is Momentum Oscillator analysis?
The Momentum Oscillator is no longer strange to investors. This indicator is used to indicate whether an asset is increasing or decreasing. Besides, they also help investors predict whether the price of the chart will adjust to the correct trajectory or not.
This is also a form of momentum indicator. To be able to use this indicator, your asset must be traded at the present time. Each asset needs to rely on the participation of traders and trading parties to decide whether that asset can increase strongly or not. However, if there is an opportunistic entry, they tend to reverse or the price stays horizontal.
This indicator will give a positive signal when the result is greater than 0 and will give a negative signal if it is less than 0. Momentum gives a positive signal when the result is greater than 0 and momentum gives a negative signal. extreme when the result is below 0. Trading experts often combine momentum indicators with price control indicators.
By dividing the result by the previous value or ROC. Multiplying that total by 100 will give the trader an adjusted percentage to create the bottom and top of the price chart. In particular, this ratio can range from less than -100% to 100% or more. When the indicator reaches a high level, the price trend is likely to change direction.
Analyze Stochastic indicators MT4 when trading
Stochastic is an indicator used to measure and compare the value of assets within a given area. This is a technical indicator that provides investors with many signals such as divergence, reversal, etc. However, it is important that investors need to clearly understand how to use it to be able to apply the indicator. reported during technical analysis.
Stochastics are scaled from 0 to 100. They are based on two oscillator lines %D and %K. When combining these two oscillating lines, investors can identify overbought and oversold areas.
What is Slippage? Analyze trading strategies suitable for traders
The concept what is slippage has been answered above. Next, let’s learn about trading strategies when applying additional indicators.
Trading strategy to cross the 0 line in an up or down direction
This strategy is applied when investors want to make a decision to enter an order whenever they see that the oscillating indicator is showing a reversal signal. If the Oscillator has a positive reversal trend, investors will buy. And vice versa, if the indicator reverses negative, place a sell order. Including 2 signals with quite large displacement directions.
Strategy when trading Martingale for investors
Trading strategy combined with what is martingale? This is a trading betting strategy for both traditional and electronic assets. They use some important rules to bring profits to investors. However, applying this strategy to the forex market will also bring risks when trading.
When using Martingale to bet on the price of a cryptocurrency. Investors can hardly find winning or losing opportunities. Therefore, investors bet on the trend. Traders place sell orders in an uptrend or buy orders in a downtrend. Despite initial losses, order volumes increased. This means that when the trend turns beneficial, investors will recover their investment and achieve the highest profit.
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Strategy when trading with What is Slippage?
Sometimes large slippages will appear if there is important news. Investors will limit trading when important news is released. At this time, the price will run very fast and strongly, sometimes evoking the greed of investors. If you place an order when the news is running, it is very easy for investors to lose their account if they do not set a stop loss.
To avoid falling into the Slippage situation, investors can choose to trade at the London or New York session. These are the times when the market has the strongest liquidity and currency pairs are running.
Conclude:
Above is the basic information to answer the problem What is Slippage. Price slippage is not as serious as you imagine, it is just like spread or commission fees on forex. Sometimes these are costs that investors are required to bear when participating in the foreign exchange market. With the above article of Forex Trading, we hope you have a better overview of Slippage in the market.
FAQs
Can price slippage in the market be completely avoided?
Investors participating in transactions will not be able to 100% avoid Slippage.
How to limit Slippage when trading?
To limit this situation, investors should not trade on weak sessions. Participate in highly liquid trading sessions.
How to receive important news on the market?
Investors can check the news calendar through the ForexFactory site
