stops

bently said:

when a sell trade is placed on say gbp/usd, at for instance 1.8000, and a stop loss added at 1.8050, at what price would the stop order be executed if the trade went the wrong way.
( spread betting with a three pip spread ). I would have said when spot price reaches 1.8050 on the data feed the sb firm uses. Am i right......?.

Click to expand...

LongandWrong said:

afraid not. most online trading platforms stop people out based on 'their quote.' so on a 3-tick spread, only 48 or 49 needs to trade for your stop to be filled.

ps. hope you were short cable at 1.8000

Click to expand...

GammaJammer said:

Depends entirely on the firm.

Sometimes your stop will get executed with zero slippage as soon as the price is 'uncovered'.

As an example of this approach, if you were short cable and had your stop at 1.8050, and you were trading on a 3 pip cable spread, you could be out at 1.8050 as soon as the price goes 1.8047/50 (the price is 'uncovered' as soon as the bid is equal to or less than your stop (if you are long) or offer is equal to or greater than your stop (if you are short).

I think that's the way CMC do it. Don't know about the rest.

For what it's worth, in the wholesale market, the convention is that the price would have to go 50 bid, and depending on the order size and the relationship with the customer, it might have to trade there in decent size. Slippage is also size and relationship dependant (in addition, market liquidity comes into consideration).

Hope this helps.

GJ

Click to expand...