When speaking about markets that are highly risky and very instable, the 1st market that normally comes to mind, at least in the minds of most, is forex. Undoubtedly, when trading with currencies you are bound to find yourself in the middle of a highly volatile market( since a currency's price is impacted by a lot of reasons, which includes, though not limited to, natural disasters, political developments, etc. ).

It is no secret that the volatility and instability of forex trading is exactly what enablesa Trader to make a profit, but this also results in a much more risky market. As you surely know, greater risks can easily turn into greater losing trades. When engaging in currency trading, a Trader will attempt to mitigate risks, and in general, a knowledgeable and experienced Forex trader will succeed in diminishing risk. Nonetheless, there may be times that no matter what a Forex trader does; they will end up having to endure losses. Often times it is a consequence of mistakes made when making decisions, but in other cases it is a matter of just chance (and bad luck at that ).


Provided that orders are rarely completed immediately, there's a time frame( between the time when you enter the order and the time after it is closed) where the currency's value can unexpectedly change; these unforeseen changes can generate profits, but they also can generate losses for any Trader. For example, imagine that you've placed a stop- loss order in order to mitigate losses in a currency trade. Now, it comes the time when the currency you are trading starts to drop; the currency reaches the stop- loss level and the platform immediately issues an order to stop and exit the trade. However, throughout the few seconds when the order takes to be processed, the currency's value continues to fall; by the time the transaction is finally processed your loss have increased because of these couple of seconds. This issue that takes place provided the impossibility of orders to be processed right away is known as slipage, and it should be very clear by now that it could be potentially devastating for a Trader. Yes, it's true that slippage may also work out to a Forex trader's advantage, but usually it is a problem which has unwanted effects.

In the currency market slippage is oftena risk that fx traders will have to put up with, specially at times when the forex market is volatile or unstable. In addition, it's important that you know that a Fx broker will usually try to use slippage to their own advantage, even if this means generating losses for you. Don't Forget, that you are trading in a Forex broker's platform system, so they might easily work the market's volatility to their benefit and use slippage as a means of creating profits at your expense.

Despite of this, forex traders normally accept the occurrence of slippage, and in most cases, they are willing to risk it. Notwithstanding the possibility of slippage, the potential profits are far too great to be ignored, therefore forex traders will continue on trading, even at times when volatility is high.