Slippage and hedging

What slippage is

Slippage is the difference between the price you expected for a trade and the price the order was actually executed at. It happens during periods of high volatility or low liquidity — most commonly around major economic news releases.

How Caveo FX handles it

Trades are executed using market execution, which means both positive and negative slippage can occur. We aim to provide fast execution at the best prices available in the market, without dealer intervention.

Positive slippage — a fill better than requested — is passed on in the same way as negative slippage. The mechanism is symmetric.

Reducing your exposure to it

• Avoid entering at the moment of a scheduled high-impact release
• Prefer limit orders when the exact entry price matters to your strategy
• Remember that a stop-loss is a stop order: it triggers a market order at your level, so in a gap it fills at the next available price, not necessarily at your level
• Expect wider spreads and thinner liquidity around the daily rollover

Hedging

Hedging is allowed at Caveo FX. You can open multiple positions in opposite directions on the same instrument within the same account.

Hedging can form part of a risk management strategy, depending on your experience and trading approach. Bear in mind that opposing positions still each consume margin and still each pay the spread, so a hedge is not a cost-free pause on a trade.