Slippage in 2025: How It Affects Australian Investors

When you place a trade on the ASX or any global exchange, you expect to buy or sell at a certain price. But what if the price changes in the milliseconds before your order fills? That’s slippage—a quiet but powerful force in every market. In 2025, with algorithmic trading, regulatory tweaks, and surging retail participation, understanding slippage is more important than ever for Australian investors.

What Is Slippage and Why Does It Happen?

Slippage is the difference between the expected price of a trade and the actual price at which it’s executed. While it sounds technical, its impact is very real—especially in fast-moving or less-liquid markets. Slippage can be positive or negative, but for most investors, negative slippage is the bigger worry, as it means paying more for a buy or receiving less on a sale than planned.

• Market volatility: In 2025, AI-driven trading bots react to news in microseconds, causing sudden price swings.

• Low liquidity: Thinly traded shares or crypto tokens are more prone to slippage because there aren’t enough buyers or sellers at each price level.

• Order size: Large trades can move the market, especially in small-cap stocks or during off-peak hours.

For example, if you try to buy $20,000 of a small-cap ASX stock at $1.00 per share, but only a few hundred shares are available at that price, the remainder of your order may fill at higher prices—resulting in slippage.

How Slippage Is Evolving in 2025

Australia’s trading landscape is rapidly changing. In 2025, the introduction of stricter best execution rules by ASIC and the growing use of dark pools (private exchanges for large trades) are reshaping how and where slippage occurs.

• Algorithmic trading: Algorithms are now responsible for over 70% of daily ASX volume, rapidly adjusting prices and sometimes increasing slippage during news events.

• Regulatory changes: The 2025 ASIC guidelines require brokers to prioritise client order execution quality, with more transparency around execution prices and slippage reporting.

• Crypto and new asset classes: Trading on decentralised exchanges (DEXs) comes with unique slippage risks, as liquidity pools can be shallow and price impact is immediate.

For retail investors using popular apps, new features like slippage tolerance settings (already common in crypto) are now making their way to traditional brokers, giving users more control but also more responsibility.

Strategies to Minimise Slippage in Your Portfolio

Slippage can’t be eliminated, but smart investors can reduce its impact. Here’s how Australians are tackling slippage in 2025:

• Use limit orders: A limit order only fills at your specified price or better. In volatile markets, this is your best protection against nasty surprises.

• Trade during peak hours: Liquidity is highest around market open and close. Avoid placing large trades outside these times.

• Break up large trades: Slice big orders into smaller chunks to avoid moving the market, or use broker algorithms designed to optimise execution.

• Set slippage tolerance: On platforms that offer it, set your maximum acceptable slippage. This is standard in crypto, and increasingly available in equities.

• Monitor broker execution quality: With new ASIC rules, brokers must publish execution statistics. Compare brokers to ensure you’re getting fair fills.

For instance, a Sydney-based ETF investor noticed that buying during the midday lull led to worse execution than trading at the open, costing her an extra 0.2% per trade—over time, a significant drag on returns.

The Bottom Line: Slippage Is Part of the Game

Slippage is an invisible cost that can quietly erode your investment returns, especially in a fast-paced, tech-driven market like Australia’s in 2025. By understanding what causes slippage, keeping up with regulatory updates, and using smarter trading tactics, you can keep more of your hard-earned gains in your pocket.