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If you were to uncheck the 'Market Order' box and buy 10 at 110USD, the order can be partially filled by 1 at 110USD and there are 9 more for sale at 113USD, the matching system would partially fill your order and then wait, right?
Does "slippage" only occur because of market orders?
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No, slippage also occurs because the price can move adversely between your decision to sell and your order's execution on the market. Typically in financial markets the other participants can see a large order and move their limit orders accordingly.
What you're talking about is called "sweeping". This is simply the fact that there are not enough orders at the best price to match a sufficiently large order. If you have a market order you will then end up filling the next price, which will be worse.
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Slippage is typically measured against the initial lowest ask / highest bid. If you place a limit order to buy at $110, but as it happens the lowest ask was $100 and due to slippage the average execution price was $105, you suffered 5% slippage even though the execution price was better than your limit.
Of course, in this case your order effectively behaves like a market order. When placing a limit order you will never pay more than your limit.
3What's "slippage"? – o0'. – 2013-05-13T07:57:40.080
I think it refers to when you enter an order at one price, but it will end up partially filled by orders at other prices – Brandon Lockaby – 2013-05-14T02:05:01.637
2Better prices or worse prices? If you get better prices, then you are posting a limit order at a value higher then lowest ask, if you get worse prices then you are posting a market order without really realising what you are doing. – o0'. – 2013-05-14T07:38:31.620
Does MtGox support so-called limit orders? – Pacerier – 2013-08-15T03:45:50.753
@Lohoris: Prices which are worse than the current lowest ask / highest bid. – Meni Rosenfeld – 2013-08-22T16:42:18.773
@Pacerier: Of course. – Meni Rosenfeld – 2013-08-22T16:42:52.133
@MeniRosenfeld, Are you sure? I think they only support instant-market-price orders and fixed-matching-non-market orders. – Pacerier – 2013-08-23T02:23:03.200
@Pacerier: Maybe I'm getting my definitions wrong but according to Investopedia, "An order placed with a brokerage to buy or sell a set number of shares at a specified price or better. Limit orders also allow an investor to limit the length of time an order can be outstanding before being canceled." AFAIK what you do on Mtgox is precisely what is defined in the first sentence. You can't put a time frame on Mtgox, but I think this doesn't make it less of a limit order. – Meni Rosenfeld – 2013-08-23T05:27:25.413
@MeniRosenfeld, That's what I'm saying. We can't even do what is defined in the first sentence. If I put a non-market order to buy at 100 and someone has non-market order selling at 80, the trade wouldn't be executed because the numbers don't match even though I'm offering more money than what the seller wants. – Pacerier – 2013-08-24T07:33:19.783
@Pacerier: In this scenario, the trade will execute at 80 (if you go second). When you place a limit order it first tries to sweep current orders. What's the problem? – Meni Rosenfeld – 2013-08-25T06:15:12.443
@MeniRosenfeld, You say the trade will be executed. The problem is that the trade will not be executed. I've asked http://support.mtgox.com and they have confirmed this behavior.
– Pacerier – 2013-08-25T06:21:09.257@Pacerier: Mtgox support are not known for being very sharp. It would make no sense to have two compatible orders which are not matched (that would be a bug in the execution engine) and the behavior I described is confirmed by my own experience (before Mtgox had a "market order" checkbox, when I wanted to buy I'd just put a bid with a very high price, and it would execute the existing asks. – Meni Rosenfeld – 2013-08-25T06:26:19.873