How do I calculate price slippage as a percentage?

Slippage is the difference between the expected price of a trade (bid price) and the price at which the trade was executed (ask price). It’s caused by several factors, such as liquidity, market volatility, and spreads. For instance, if there are two buyers and three sellers in a market depth, then this implies that none of what is offered by the traders can be filled immediately. As such, the trades are executed at a price higher than what is being asked for on one side of the market depth and lower than what’s being bid on the opposite side.

When this occurs, it affects the profits traders make from their trades as they do not obtain what they expect when placing their orders. To calculate the price slippage as a percentage:

[(Bid Price – Ask Price) / Quantity] * 100%.