What is Execution Risk?
Execution risk is the gap between the results a backtest assumed and what actually happens when orders go to a live market. Slippage, partial fills, delays, fees, and outages can all make live performance worse than the simulation. A strategy that ignores these costs can look profitable on paper and lose in reality.
Why Execution Risk matters
It is a main reason live results lag the backtest, so it has to be accounted for before going live.
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