Slippage costs can accumulate significantly, yet many traders neglect to monitor them due to time constraints or lack of appropriate tools. In this article, we highlight the importance of tracking slippage for active traders and demonstrate how seemingly minor daily costs can lead to substantial annual losses.
Understanding Slippage Costs
Slippage refers to the difference between the expected price of a trade and the actual price at which it is executed. This discrepancy can either be beneficial or detrimental to your trades, but it’s the negative impacts that can lead to considerable financial losses.
Below are three reasons why active traders should prioritise monitoring slippage:
#1. Slippage Costs Are Not Insignificant
Even a small slippage cost on each trade can accumulate, particularly for those dealing with high volumes. These seemingly negligible amounts can quickly multiply, resulting in thousands of euros lost by the end of the year.
#2. Slippage Can Wreak Havoc on Your Numbers
It’s easy to overlook slippage in your calculations, but it can significantly distort your financial reports. If, for instance, you incur €20,000 in slippage by year’s end, your profit and loss statements will be misleading. Yes, you really could save a lot of money by monitoring your slippage!
#3. Slippage Must Be Factored In
While losing a few cents due to slippage per trade may seem trivial, active traders understand the importance of including these costs in their overall plan. Without a comprehensive view, your investment strategy may face unforeseen challenges throughout the financial year.
Slippage for Active Traders: Small Costs, Big Impact
The saying ‘little drops of water make the mighty ocean’ perfectly encapsulates the cumulative effect of slippage. At Wakett, we’ve developed software designed to help you monitor and reduce slippage, ensuring you maintain complete oversight of your trading expenses.
What are you waiting for? Reach out to us today to learn how we can help you save thousands on slippage fees!