Slippage is a measure of the difference between the expected price of a trade and the price at which the trade is actually executed. It occurs when the market conditions change rapidly and the available liquidity is low. It can be measured in absolute or relative terms, and it is usually expressed as a percentage or a monetary value.
The calculation of slippage can be done in different ways. One way is to find the absolute difference between the expected and the executed price of a trade. Another way is to calculate the relative difference, which is the percentage of difference between the expected and executed price.
Slippage can be caused by several factors such as volatility, low liquidity, and high demand. It is important to note that slippage is not always negative, it can also be positive if the trade is executed at a better price than expected. Traders should consider slippage when placing orders and setting stop-losses, to ensure that their trades are executed at the best possible prices.