Take-profit orders do not slip, they just fill late or not at all

[Amanhasnoname]

The odd thing about take-profit orders is that the usual slippage story flips. A take-profit is effectively a limit order, so when it fills, it fills at the target or better. The problem is whether it fills at all.

Here is the scenario scalpers know: price runs up to the target, the chart shows a high right at it, and the trade is still open, then reverses and stops out. Part of that is bid versus ask. A short closes at the ask, so a bid-only chart touching the target means the ask is still a spread away. Another part is queue position: at the target price a limit sits behind others, and a touch is not the same as a trade-through.

The cost is quiet. If 1 in 15 target touches fails to fill, and those trades turn into losers, that dents expectancy more than a small amount of slippage would.

Some fixes: place targets 0.1 to 0.2 pip inside the obvious level, or use a market close on touch for strategies where the miss hurts more than the extra slippage. Which wins depends on the pair and the hour, so test it.

Is pulling targets inside the level worth the lost pips, or does a market close on touch work better?