Slippage
The difference between the expected price and the actual fill.
What is Slippage?
The cost of the market moving between your decision and your execution, plus the price impact of your own order. Grows with order size, volatility, and illiquidity.
Slippage: a worked example
You intend to buy at $50.00 and fill at $50.08 - 16 bps of slippage.
More terms in Positions & Trade Mechanics
Long Position
You own the asset and profit when its price rises.
Short Position (Short Selling)
You borrow shares, sell them, and profit if the price falls.
Margin
Borrowing from your broker to buy securities, using the account as collateral.
Cash Account
An account where every purchase is paid for in full, no borrowing.
Leverage
Using borrowed money to increase exposure relative to your own capital.
Initial Margin (Reg T)
The equity you must put up to open a margin position - generally 50%.
Maintenance Margin
The minimum equity percentage you must keep in a margin account.
Margin Call
A demand to add cash or securities after equity falls below maintenance.