Slippage is the difference between the price at which a trader expects an order to execute and the price at which it actually fills. It arises because markets move between decision and execution, and because an order may consume more than the best available quote in thin or fast conditions.
Slippage is usually adverse and is worst exactly when it matters most: stop-loss orders triggered in fast markets fill beyond the stop level, news gaps jump straight over resting orders, and market orders in illiquid instruments pay a wide spread. Limit orders cap slippage at zero — but at the cost of sometimes not filling at all.
For strategy evaluation, slippage is a cost line, not a footnote. High-frequency, tight-stop strategies can be profitable on paper and unprofitable once a realistic per-trade slippage assumption is added, so honest backtests state the assumption explicitly — including when it is zero and why.
A market order expected at $100.00 fills at $100.04 — $0.04 per share of slippage, or $20 on 500 shares.