Slippage is the difference between the recommended price of a trade and the price at which the trade is actually executed. Tradespoon provides you with daily Trade recommendations and informs you of the Entry Prices effective at the end of each day. When the market opens the next day, sometimes you may get at a better price and sometimes you may get a worse price.
But sometimes, based on your portfolio and your risk tolerance, you can do this yourself. If you have exposure to the market and if you are fully allocated, then you do not want to take any slippage. You will probably want to raise the cash and sell your position. If you have above 50% cash and you want to participate in some of these recommendations, then you can allow 10% slippage on our trade recommendations. The most important consideration here is cash: if you are not over-leveraged, allow slippage. If you do not have, say 30% in cash, avoid it.
Keep in mind that the Tradespoon performance page shows the Close Price effective when the market closed. Ultimately, when the market opens the next day, it is you who will have to decide whether you can get a better price than what we have recommend or allow a 10% Slippage.
The general theme here is your risk tolerance. Be patient and let the market come to you, especially when your Trading Plan drives decisions . If you are targeting X% return per month, and getting close to the target, be patient. If you want to initiate a bullish position and the market happens to be overboard, give it some time to let the market come in your direction and you will get fill at a better price.
Even though Slippage is allowed if portfolio cash is greater than 30%, you need to have 30% of your portfolio for rolling your Spreads or mitigating the risk in your account or repairing some of the positions that went against you. This, again, depends on your personal risk tolerance and trader psychology.