slippage in futures

[ballz]

started to think about slippage after reading that schooloftrade.com is doing simulation trading and that live trading produced ~5 tick difference in fill price.

Ive been sim trading futures on ninja trader + zenfire feed for a little bit, and are the slippages really that bad? Is what I learn by sim trading useless?

 

[Adamus]

Slippage will vary depending on your order type - limit orders should have no slippage, stops and market orders will have some.

Other factors include which market or stock it is, which broker you are using, what time of day you are trading (e.g.outside normal hours = more slippage), market liquidity.

A sim account will only be as good as it was programmed. It might even have a configuration setting to allow you to set the slippage yourself.

 

[ballz]

I was hoping for something a little more specific.

For example .. does CL and ES have that bad slippage thus SIM accounts are useless?

I actually thought that SOT.com had some good stuff .. and now that I hear that 1) its using a sim account and 2) that theres huge slippage on live accounts .. I felt a little discouraged that what I've been learning on SIM is useless.

 

[DionysusToast]

On the ES....

If you put your stops where everyone else has their stops - then you will certainly suffer from slippage.

Typically people put there stops below/above the last swing low/high - you can expect to slip up to 3 maybe 4 ticks with a stop there on an agressive move against. What happens is that the price dips below the swing low (or above the high) and all of those stops tigger and become market orders which causes a waterfall which lasts a few seconds but sees thousands of contracts go through at 3 or 4 levels.

With a stop elsewhere you have less chance of this happening and slippage is usually 1 tick or not at all.

 

[ballz]

any comments about sim trading + slippage?

should I just start trading real money?

 

[DionysusToast]

Sim trading more than likely will not show you the effects of slippage - you'd need to discuss this with your broker.

Are you planning to put your stops in the same place as everyone else ?

 

[Rhody Trader]

Slippage will vary depending on your order type - limit orders should have no slippage, stops and market orders will have some.

Actually, limit orders can have slippage, but it would only ever be positive because by definition they are "or better" executions.

 

[Pento]

SIMs generally don't have any slippage and are often not a true indicator of how profitable you will be. They should be used to get you familiar with the trading software itself and to develop a basic trading strategy.

With the SIM it's play money so the mentality/psychology of trading is just not really there. But spend as much time on the SIM until you feel completely comfortable to go live with real money. You don't want to rush into live trading with a poorly developed strategy.

Don't worry too much about slippage. If you are a good trader then you will be profitable even with some slippage.

 

[anley]

Yes, why are you worried about slippage.

10s of thousands of traders trade the markets without worrying about it because it's a fact of life.

As for trading real money, I'd hold off for at least a few months if I were you. Spend the time learning more about the markets.

 

[Adamus]

You might not have to worry about slippage if you have a system you're happy with, but if you're trying to run high frequency low profit trading systems then slippage can kill it off completely. That's only for the big guns who can put their servers right by the exchanges.

And of course once in a while you'll suffer massive slippage on a stop order and have something to complain about for days.