How can I avoid slippages?

If you have this question in mind, then sure you will be trading with considerably big capital.

You don’t feel the effect of slippages until you place order with large quantities. The most affected by the slippages are the breakout traders, because breakout normally happens with momentum, the more the momentum, the more the slippages are.

For the question 'How can I avoid slippage'?
The answer is 'You cannot'

and not even you can make slippage accountable with some points or percentage, though for convenience you can make it accountable with some % or points.

Slippage depends on multiple factors like demand and supply, Bid/Ask spread, liquidity etc

But you can reduce slippage by adopting best practices. (The points discussed here are w.r.t retail traders and not for systems deployed on co-location)

Below are the steps we implemented in our proprietary trading systems that we run.

  • We deployed our capital in multiple diversified strategies, each strategy run in an independent cloud server
  • Our cloud servers are located in AWS Mumbai Data center (latency is < 1ms to connect broker OMS)
  • We split each bulk order in to 3 to 5 slices
    • First slice will be placed at MARKET
    • Second slice will be placed as LIMIT with Bid1/Ask1 +- 1 tick
    • Thirds slice will be placed as LIMIT with Bid2/Ask2 +- 1 tick (and so on up to Bid5/Ask5)
  • All those orders which are open beyond 60 seconds are cancelled