Adrian Reid gives a brief trading tip: track your trades to detect slippage, and if slippage is high use limit orders (and monitor them) or increase your liquidity requirements. He notes most of his trades have zero slippage because he places limit orders and is often at the computer to manage execution; traders without that luxury may prefer higher-liquidity instruments or different order types.
Well, you've got your trade tracking spreadsheet, right? So you know if you're getting lots of slippage or not. And if you're getting lots of slippage, then you want to think about using limit orders. So you'll know because for your account size, for the stocks you're trading, for the systems you're trading, for your position sizing. Oh, I'm getting lots of slippage. Oh, my execution is not great. Oh, I should use limit orders. Like most, most trades I get in and get out with zero slippage. Not every time, but most times because I'm placing limit orders.
And I'm getting filled in the opening price match, vast majority of my trades. But if I use a adaptive market order, there'll be a little bit of slippage. I happen to be free. I'm sitting at the computer anyway, so I place limit orders. But everyone has that luxury. Don't have the luxury, you don't have the choice. Right? So if you're finding you're getting lots of slippage, you've got two choices. Use limit orders and monitor them to make sure they get executed or. Or increase the liquidity requirement so that your slippage is less.
