I’ve been experiencing noticeable slippage lately, especially when executing large orders in volatile markets. I’m curious to know how others on this forum manage slippage. Specifically:
- What strategies or methods do you use to minimize slippage?
- How do you structure large orders? Do you break them down, use limit orders, or any other techniques?
- Are there specific tools or brokerage features that you’ve found effective?
Would appreciate hearing from experienced traders on how they tackle this issue.
For example, there are several ways to execute a very large order. I will list some of them
- Market Order:
Place a direct market order accepting immediate execution at the best available price, accepting slippage. - Limit Order at Last Price (with Cancellation):
Place a limit order at the current last traded price, wait for execution. If unfilled after a specified time, cancel and reposition at the new last price. - Limit Order with Defined Slippage:
Place a limit order allowing for a predetermined acceptable slippage percentage, canceling and adjusting if not filled within a specified timeframe. - Immediate-or-Cancel (IOC) Order with Defined Slippage:
Place IOC orders repeatedly at incremental slippage levels, waiting briefly before placing subsequent orders. - Iceberg/Disclosed quantity Orders (Hidden Quantity):
Break a large order into smaller hidden orders that only reveal a fraction of the total size at a time, reducing market impact.