What is Slippage in Forex? A Complete Guide for Australia Traders (2026)

What is Slippage in Forex?

Slippage happens when market volatility or low liquidity prevents your order from being filled at the exact price you requested. For example, if you place a buy order on AUD/USD at 0.7200, but the market moves quickly and your order fills at 0.7205, that 5-pip difference is slippage. Slippage can be negative (worse price) or positive (better price), though negative slippage is more common.

How Slippage Works in the Australian Market

When you trade forex through an Australian broker regulated by ASIC, your order goes to a liquidity provider or an electronic communication network (ECN). If the market is moving fast—like during the release of Australian employment data or RBA interest rate decisions—the price you see on your screen may not be available by the time your order reaches the market. This delay causes slippage. ASIC requires brokers to have fair execution policies, but they cannot control market movements.

Why Slippage Matters for Australia Traders

For experienced Australia traders, slippage directly impacts profitability, especially on high-frequency or scalping strategies. AUD pairs like AUD/USD, AUD/JPY, and AUD/NZD are particularly sensitive to local economic news. A 10-pip slippage on a 1 lot trade in AUD/USD equals AUD 100. Over a month, slippage can add up to significant costs. Understanding your broker's slippage policy and trading during high-liquidity hours (Sydney-London overlap) can help minimize its impact.

For Australia traders, slippage is particularly relevant due to the unique characteristics of the local forex market. ASIC regulation requires brokers to have transparent execution policies, but slippage remains a normal market occurrence. Many Australian traders use BPAY or bank transfers to fund their accounts, which can cause delays in fund availability—potentially missing trade entries and increasing slippage risk. Credit card deposits are faster but may incur fees. Experienced traders in Australia often choose brokers with low latency execution and multiple liquidity providers to reduce slippage. Additionally, AUD pairs are heavily influenced by local economic data, commodity prices, and RBA decisions, all of which can cause sudden price gaps. Understanding how your broker handles slippage during these events is crucial for managing risk.

1. Choose an ASIC-regulated broker with transparent execution policy
   Review the broker's Order Execution Policy to understand how they handle slippage, especially during news events. Look for brokers that offer 'No Slippage' guarantees or 'Fill or Kill' order types.
2. Trade during high-liquidity sessions
   For AUD pairs, the best liquidity is during the Sydney-London overlap (10:00 AM – 7:00 PM AEDT). Avoid trading during major news releases unless you use limit orders.
3. Use limit orders instead of market orders
   Limit orders give you price certainty, while market orders are more susceptible to slippage. For scalping or day trading, consider using limit orders with a small buffer.
4. Monitor economic calendar for Australia events
   RBA rate decisions, Australian employment data, and GDP releases can cause significant slippage. Plan your trades around these events or use stop-loss orders to limit damage.

Slippage vs. Requotes: Slippage is automatic and does not require your confirmation, while requotes are when your broker asks you to accept a new price. Most ASIC-regulated brokers use a 'no requotes' policy for market orders, meaning slippage is the norm. Slippage vs. Spread Widening: Spread widening increases the cost of entering a trade, while slippage affects the execution price. Both can occur simultaneously during volatile markets.

When you place a market order to buy AUD/USD at 0.7200, your broker sends the order to a liquidity provider. If the market is moving fast—say, after a surprise RBA rate cut—the price may jump to 0.7205 before your order is filled. Your broker executes at 0.7205, resulting in 5 pips of negative slippage. For a 1 standard lot (100,000 units), this equals AUD 50 in additional cost. The same process can happen in reverse for sell orders. ASIC-regulated brokers must execute orders at the best available price, but they cannot guarantee the price you see on your screen.

Example 1: You place a buy market order on AUD/USD at 0.7200 during the Sydney session. Suddenly, Australian GDP data is released, and the price jumps to 0.7210. Your order fills at 0.7208, giving you 8 pips of negative slippage. On a 1 lot trade, that's AUD 80 extra cost.

Example 2: You place a sell limit order on AUD/JPY at 85.00. The market gaps down to 84.90 due to a commodity price crash. Your order fills at 84.95, giving you 5 pips of positive slippage (better price). This saves you AUD 50 on a 1 lot trade.

ASIC (Australian Securities and Investments Commission) regulates forex brokers in Australia under the Corporations Act 2001. ASIC requires brokers to have adequate risk management systems, including fair execution policies that address slippage. Brokers must disclose how they handle slippage in their Product Disclosure Statement (PDS) and Financial Services Guide (FSG). For Australia traders, ASIC regulation provides a layer of protection, but it does not eliminate slippage. Always choose an ASIC-regulated broker and review their execution policy to understand your rights regarding slippage.

• Trade AUD pairs during Sydney open: The Sydney session (7:00 AM – 4:00 PM AEDT) offers good liquidity for AUD pairs, reducing slippage risk compared to trading during low-liquidity hours.
• Use a VPS for automated trading: If you use Expert Advisors (EAs), a VPS hosted in Sydney reduces latency and slippage for Australia traders.
• Avoid trading during RBA announcements: RBA rate decisions cause extreme volatility. If you must trade, use limit orders with a 10-20 pip buffer to account for slippage.
• Check broker slippage statistics: Some ASIC-regulated brokers publish slippage reports. Review these to see how often slippage occurs and whether it's positive or negative.
• Diversify currency pairs: If AUD pairs are too volatile, consider trading EUR/USD or GBP/USD during London session, which may have less slippage due to higher liquidity.

Slippage is an unavoidable part of forex trading, but with the right knowledge and tools, Australia traders can minimize its impact. By choosing an ASIC-regulated broker, trading during high-liquidity sessions, and using limit orders, you can reduce slippage on your AUD trades. Remember to always check your broker's execution policy and test with a demo account before trading live. Ready to start trading? Compare ASIC-regulated brokers on comparebroker.io to find one with transparent slippage policies and fast execution.