Slippage (finance)

Slippage is like when you try to catch a ball, but it slips out of your hands and falls to the ground.

In finance, slippage happens when you buy or sell something like stocks or currency, but the price changes before your order goes through. So instead of buying or selling at the price you were expecting, you end up paying more or receiving less than you wanted. This can happen because the market is moving very quickly, or because there aren't enough buyers or sellers at the price you want.

Imagine you have $10 and want to buy a toy car from your friend. You tell your friend you'll pay $5 for it, but your friend says they want $7. That's slippage - you didn't get the price you wanted because your friend changed their mind.

In finance, slippage can be a problem because it can make your trades more expensive or less profitable than you were planning. Traders often try to avoid slippage by using limit orders, which means they set a specific price for buying or selling and won't accept anything else.

So next time you're playing catch or trying to buy a toy, remember that slippage can happen when things don't go exactly as planned!