Slippage represents the real-world friction between trading strategy and execution. It can be positive or negative, but it typically erodes performance. Causes include market volatility, low liquidity, order size, or delays in execution infrastructure. High slippage is especially problematic for high-frequency or systematic trading strategies where tight execution is critical. It’s closely monitored in prime brokerage reports and trading analytics dashboards. For allocators, persistent negative slippage may raise red flags during Operational Due Diligence (ODD) and track record verification efforts.