Chapter 5 · Trading Concepts

Spread, depth and slippage

The costs that never appear on a contract note.

10 of 66 · 9 min

The order book

Sellers stack above, buyers below. Nothing trades until someone crosses the gap. The quantity at each price is how much you can trade before moving it.

Bid is the best price a buyer offers. Ask is the lowest a seller accepts. The gap is the spread, and it is a real cost: buy at the ask and sell at the bid and you have lost the spread before anything moved.

Slippage, worked

You want 2,000 shares. The book offers 350 at Rs 510, 800 at Rs 511, 1,200 at Rs 512.

350 × 510 = 1,78,500
800 × 511 = 4,08,800
850 × 512 = 4,35,200
Total Rs 10,22,500 for 2,000 shares → average Rs 511.25, not the Rs 510 you saw.
Slippage = 1.25 per share = Rs 2,500 on this order.

Saved in this browser only — there is no account to create. Clearing your browser data clears your progress.