Regarding slippage, there is theoretically no limit to how much slippage could occur. That’s because when your stop loss is triggered, it becomes a market order and will be filled at the best available price in the market. Even if this price ends up being significantly worse, having your stop loss filled is better than the alternative. That is for your trade to remain open and potentially lose more if the market continues to move against you.
The biggest risk of slippage is during a news event or a weekend price gap. For a recent example, pull up charts of some GBP crosses and look at where their prices reopened after the weekend of the Brexit vote.
Slippage is a risk of trading in any market, with any broker, but with FXCM slippage can be either positive of negative. Positive slippage is more common with limit order, while negative slippage is more common with stop orders due to the momentum of price movement when such order types are triggered. The latest FXCM execution stats showed the following:
[li]78.71% of all orders had NO SLIPPAGE.[/li][li]12.77% of all orders received positive slippage.[/li][li]8.52% of all orders received negative slippage.[/li][li]50.02% of all limit and limit entry orders received positive slippage.[/li][li]39.9% of all stop and stop entry orders received negative slippage.[/li][/ul]
FXCM’s Trading Station has order features called Market Range and Range Entry. Market Range limits your negative slippage, but not your positive slippage, on Market Orders. Range Entry does the same thing but for Entry Orders (Stop Orders).*
[I]* For risk management purposes it’s best to use this Range Entry feature only for opening new positions with stop orders (AKA Stop Entry orders) and not for closing existing positions with stop orders (AKA Stop Loss orders). The reason is because, from a risk management standpoint, negative slippage on a Stop Loss order is preferable to a trade remaining and potentially losing even more money.[/I]