Slippage and Cost Assumptions
Why execution assumptions such as slippage belong in historical testing even when a broker advertises commission-free stock trades.
A backtest without execution assumptions can look cleaner than real trading conditions.
What slippage means
Slippage is the difference between an expected price and an actual execution price. It can appear when markets move, spreads widen, or liquidity is thin.
A small assumption can matter across many trades, especially in active workflows.
Commission is not the whole cost story
Commission-free stock trading does not remove spread, slippage, market impact, or tax considerations.
Historical testing is more informative when those practical frictions remain visible.
How ZadVest uses the idea
ZadVest lets supported rule-builder tests include slippage assumptions. The result is still historical and assumption-dependent.
Changing the cost assumption can change the result, which is why the setting belongs near the metrics.