Slippage occurs when a trade is executed at a different price than expected, typically due to market volatility or rapid price movements. This can happen during significant news releases, economic announcements, or low liquidity periods. For example, if a trader places an order to buy a currency pair at a specific price, but the market moves quickly, the trade might be executed at a higher price, resulting in a loss. Slippage can be either positive (executing at a better price) or negative (executing at a worse price). To mitigate slippage, traders can use limit orders instead of market orders, which specify the desired entry or exit price. Understanding slippage and its potential impact is crucial for effective trade execution and risk management in forex trading.