"slippage"

Quote from Eliot Hosewater:

Two questions:

1. Don't you always buy at the ask and sell at the bid? If you put in a limit order and it gets filled doesn't that just mean that the market has moved enough to meet your price? If so, then it really means that the market has moved against you? Let's say you want to buy at 1.70 but the current price is 1.90. The market would have to move down to meet your price, but in the long run you want it to be going higher.

2. Last Friday (Oct expiration) I put in a limit order to BTC an IC on GOOG about three minutes before closing. I put the order in at $5 which was the natural at the time. I waited about a minute before getting filled, but the TOS screen showed the natural price going down as far as 4.50. Does that just mean there was probably a backlog due to high volume, or did my 5.00 order get executed when it could have been done for 4.50? Isn't a limit order for your price or better?
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1. That's correct, however this is not considered slippage since you got the price you wanted.

2. A limit order is at your price or better. However, an iron condor has 4 legs, which are generally filled on a single exchange (you can get it filled on different, but I'd say it's unlikely at the close of expiration friday) while the composite bid-ask quote is coming from all exchanges.
 
Quote from bellman:

in your original post you mentioned nothing of a limit order.
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look at the third post. last sentence.:)

thanks for the clarification guys.

to sum it up for a newbie would be it be safe to say that:

1) slippage affects large block trades or partial fills.

2) stop orders that fill or sell @ market price

3) as a small trader/investor if i incur slippage losses on 1 or 2 contract trade the effect was minimal compared to staying in a bad trade?

thanks guys
 
Quote from snugglepuppy666:

look at the third post. last sentence.:)

thanks for the clarification guys.

to sum it up for a newbie would be it be safe to say that:

1) slippage affects large block trades or partial fills.

2) stop orders that fill or sell @ market price

3) as a small trader/investor if i incur slippage losses on 1 or 2 contract trade the effect was minimal compared to staying in a bad trade?

thanks guys
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3. Slippage can be a significant part of trading even for a retail trader.

Slippage is incured every time the fill price is different to your decision/expected price.
 
Quote from MTE:

3. Slippage can be a significant part of trading even for a retail trader.

Slippage is incured every time the fill price is different to your decision/expected price.
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10-4, point made

a loss is a loss.

thanks for your wisdom :)
 
"SLIPPAGE The difference between estimated transaction costs and actual transaction costs. The difference is usually composed of revisions to price difference or spread and commission costs."

thanks for the link.. again im sooo new to this but i dont know if i would consider commission cost a factor in slippage due to the fact that it is a constant.

I know x transaction is gona cost x in fees.

:)
 
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