When placing orders in futures markets, there can occasionally be a discrepancy between the price at the time of order placement. This discrepancy is commonly known as slippage.
An example of this would be placing a market order to buy when you see the price of 4000.25 and getting filled at 4000.50.
There is no way to completely avoid slippage, since there is always some interval of time between order placement and order execution (fill). Please keep in mind is that Tradovate has no control over the fills that a customer receives, since all order execution is managed by the futures exchange.
If you are looking to mitigate the amount of slippage in your trading activity, you may want to consider the following:
- Placing Limit orders - Limit orders have to be filled at their price or better, so it is almost impossible for there to be slippage on a limit order.
- Placing Stop Limit orders - Stop (market) orders can occasionally experience slippage, since a Stop order becomes a market order once the Stop price is touched. Placing a Stop Limit order instead will require the order to be filled at the stop limit price.
- It is important to note that Limit and Stop Limit orders have the potential to go unfilled due to their price restrictions.