Slippage in News Events: Why Your Stop Loss Didn't Save You
You set a stop loss, the price hit it, yet you lost more than expected. Learn what slippage is, why it spikes during economic news, and how to protect your trades.
You set your stop loss at the right level. The price touched it. Yet your loss was larger than you calculated. It wasn’t your mistake: it was slippage, and understanding it changes how you should trade around news events.
What exactly is slippage?
Slippage is the difference between the price you intended to execute an order at and the price at which it was actually filled. A stop loss doesn’t guarantee your exit price—it only guarantees that once the level is hit, a market order is sent to fill at the best available price at that moment, which may be far from your defined level.
Why it spikes during macroeconomic data releases
When major data like inflation or employment figures are released, liquidity in the order book can vanish for seconds: market makers pull their quotes to avoid exposure to unpredictable moves. In that vacuum, a market order jumps straight to the next available price level, which can be significantly farther away than expected.
Three ways to reduce its impact
- Avoid opening or holding sensitive positions just before high-impact economic releases, unless your strategy is explicitly designed for that scenario.
- Use limit orders when your strategy allows, accepting the risk of non-execution in exchange for controlling your maximum exit price.
- Size your position assuming your stop may not execute precisely, leaving extra capital buffer for the worst reasonable outcome—not just the expected one.
Slippage isn’t a broker failure or bad luck: it’s a structural feature of markets during low-liquidity moments. Trading with this knowledge is what separates surprise from preparedness.