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Market Intelligence › Basic Terminologies
The small difference that separates a backtest from live results
Published by The Retail Trader · AUG 04, 2026 · Order Flow
Slippage is the gap between your expected entry or exit price and the actual fill price. On each trade it looks small, and over a year it can become the biggest cost of a strategy.
The market does not stand still between placing an order and its being matched. In that interval the best price can rise or fall, and your order fills at the next available level.
The second cause is depth. If there is only a small quantity at the best price, the rest of your order fills at worse levels than that — this is called impact cost.
Slippage is not equal everywhere:
• Most in the opening and closing minutes.
• Right after a result, budget or policy announcement.
• Always more in illiquid smallcaps and far-out option strikes.
• Always more in a large size than in a small one.
When backtesting, slippage has to be added manually, otherwise the result comes out false. A strategy that gives a very small edge per trade often turns loss-making live because of slippage alone.
This article is for educational purposes only — it is not a buy or sell recommendation, makes no guaranteed-return claim, and is not advisory. Rules, rates and mechanics are changed from time to time by the exchanges, SEBI and RBI, so verify every number yourself with your broker or an official source.