stops

[bently]

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......?.

 

[LongandWrong]

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......?.

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

 

[bently]

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

unfortunately not.

 

[bently]

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

Thanks for both of the replies. It's cleared up one of many questions. back to the charts to see what occurs tonight.

 

[charliechan]

check with the broker.

heres why (i know we are talking currencies but bear with me)

on nasdaq, your stop is executed when a quote matches your price.
on nyse your stop is executed when a trade occurs at your price.

this is just how the stop is triggered - not where your fill actually is.

so it really can vary - check on the brokers policy.

you may also want to consider trading futures if interested in bp/usd. although the volume aint much, there are still many market makers/black boxes keeping the spread tight - 2 ticks usually (at $6.25 a tick)

at around $5 r/t for most retail traders it will probably work out cheaper than fx brokers.

there are other reasons why imo futures are a better market, but i dont want to start that argument here!

good luck.