23 May 2011

Trust is good, control is better

Slippage in its most basic form means the difference between the expected price of a trade, and the price the trade actually executes at. This can be due to fast moving markets and is caused by the delay between the placing of an order and the time it reaches the market. Slippage can also be due to mishandling or even abuse by the broker that is entrusted with executing the order. So investors should regularly scrutinise the handling and execution of their investment transactions. An ongoing controversy between major participants in the financial markets illustrates that not even sophisticated investors are immune from becoming victims of poor order handling.