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What happens to stop when market gaps

This is a discussion on What happens to stop when market gaps within the UK Shares forums, part of the Equities category; What happens to your stop when the market gaps, ie, if you sell at 1250 with a stop at 1230 ...

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Old Jul 8, 2009, 5:31pm   #1
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What happens to stop when market gaps
What happens to your stop when the market gaps, ie,
if you sell at 1250 with a stop at 1230 but the market opens tomorrow gapped down at 1200?
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Old Jul 8, 2009, 5:51pm   #2
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Re: What happens to stop when market gaps
och !

you get filled at best level at a buzzzzz y open

if your trading size a stop is lazy and only part time protection !

who buys from you when you get out ?


some SB do guarenteed ones if you pay extra spread
Last edited by tenbobtrader; Jul 8, 2009 at 5:54pm. Reason: some SB do guarenteed ones if you pay extra spread
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Old Jul 8, 2009, 6:26pm   #3
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Re: What happens to stop when market gaps
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Originally Posted by tenbobtrader View Post
och !

you get filled at best level at a buzzzzz y open

if your trading size a stop is lazy and only part time protection !

who buys from you when you get out ?


some SB do guarenteed ones if you pay extra spread
So if it gaps down 50 points, you lose 50 rather than the 20 your stop protected?
How do they guarantee a stop, don't they lose out then?
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Old Jul 8, 2009, 8:12pm   #4
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Re: What happens to stop when market gaps
you get creamed in the real world...but on nancey spreadbetting you can use garentueed stops as said
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Old Jul 9, 2009, 3:02am   #5
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Re: What happens to stop when market gaps
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So if it gaps down 50 points, you lose 50 rather than the 20 your stop protected?
How do they guarantee a stop, don't they lose out then?

With a guaranteed stop you pay an extra spread (or com). 9 times out of 10, the gap between the stop and the fill will be less than the extra spread paid (e.g if you close it yourself, if the trade is closed by a limit order). In theory, the 9 times the company guaranteeing the stop makes money pay for the 1 time they have to wear the slippage. In my experience, the extra charge isn't treated as a revenue stream by the cos.
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Old Jul 9, 2009, 4:19am   #6
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Re: What happens to stop when market gaps
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With a guaranteed stop you pay an extra spread (or com). 9 times out of 10, the gap between the stop and the fill will be less than the extra spread paid (e.g if you close it yourself, if the trade is closed by a limit order). In theory, the 9 times the company guaranteeing the stop makes money pay for the 1 time they have to wear the slippage. In my experience, the extra charge isn't treated as a revenue stream by the cos.
I don't think they offer guaranteed stops on stocks, not my broker anyway, only guaranteed stops on forex and the spread there is an extra 5 pips.
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Old Jul 9, 2009, 4:23am   #7
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Re: What happens to stop when market gaps
Some will offer them on stocks - generally .3% extra on blue chips.

If you're trading majors, I'm not sure they're worth the extra spread unless you're holding over figures.
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Old Jul 10, 2009, 6:46am   #8
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Re: What happens to stop when market gaps
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Originally Posted by SanMiguel View Post
So if it gaps down 50 points, you lose 50 rather than the 20 your stop protected?
How do they guarantee a stop, don't they lose out then?
Well they aren't a charity. The punters pay for it eventually.
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