Slippage is the difference between the price at which a trader expected a trade to execute and the price at which it actually filled. Positive slippage means the trade filled at a better price than expected, while negative slippage means it filled at a worse price. Slippage happens because prices move continuously, and the time between placing an order and the order being executed is enough for the market to shift, particularly on larger orders or during volatile conditions.

The most common causes are market volatility around news events, low liquidity on specific instruments or at specific times, and larger order sizes that cannot be filled at a single price level. A stop loss triggered during a sharp market move may execute several points away from the stop price if liquidity is thin. Scheduled economic releases, central bank decisions, and sudden news often create short windows where slippage is significantly higher than normal.

Slippage can affect a prop firm account in two important ways. First, it can cause stop losses to execute at worse prices than planned, producing larger losses than the trader intended. Second, those larger losses can push the account closer to the daily loss limit or maximum drawdown, and in some cases trigger a breach.