The difference between the expected price of a trade and the actual price at which the trade is executed. Slippage often occurs due to market volatility or liquidity issues – e.g., an EA tries to buy at 1.3000 but gets filled at 1.3005, incurring 5 pips of slippage. In backtesting, many simulations assume perfect execution (no slippage), but in reality slippage can eat into performance. Even a 0.1% price slippage regularly can significantly affect high-frequency strategies. Good backtesting practice is to model slippage (e.g., subtract a pip or two on each trade or use variable slippage models) to make results more realistic.

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