What happens to stop when market gaps

[Splitlink]

Gapping is not just for spread bet companies, the market gaps in any stock sometimes.
eg Friday closed at 110, Monday opens at 120 instead of at 110.



No! LOL
You put in an order to go short at 100. The market is currently at 110 and closed at 110. The next day it gaps down and opens at 90 having completely missed your entry point of 100. Does the order get filled?

Not in that instant. It will get filled if the gap gets filled. Most gaps do get filled. It will keep going up, filling orders and closing out the stop losses behind those opening orders
so that those traders take a loss, then it is quite likely to start going down again, leaving a load of PO'd traders in its wake.

 

[Claudia123]

the market gaps due to after hours trading simple

 

[Calinor]

San Miguel, if price closed at 110 (say) and you set an order to go short at 100. Then the market gaps down and opens at 90, of course you won't be filled at 100. Price didn't trade there, so how could you get a fill? If that were possible, we would all place orders on every stock either side of where it closed and then when there is a gap we'd have made money. That is obviously too good to be true.

You set an order to open a trade at a level. If price doesn't hit that level, a trade isn't opened.

 

[raysor]

Gapping is not just for spread bet companies, the market gaps in any stock sometimes.
eg Friday closed at 110, Monday opens at 120 instead of at 110.



No! LOL
You put in an order to go short at 100. The market is currently at 110 and closed at 110. The next day it gaps down and opens at 90 having completely missed your entry point of 100. Does the order get filled?

NO, of course not

 

[raysor]

He did not say a stop loss.

"Yeah, you put a stop order"

So a stop order is not a stop loss?

 

[fayalac]

Nobody will guarantee a stopp when the market is closed, nobody, if you led an open position to a closed market start praying it doesnt go back, it can erase your account.

 

[SanMiguel]

"Yeah, you put a stop order"

So a stop order is not a stop loss?

No, a stop order is an order to buy or sell, above or below the current price.
There are also limit orders.
Once that order is triggered then you have further stop orders and limit order, which are the same as stop loss and take profit.
Example:
Forex with Alpari (UK) - New to Market - MetaTrader User Guide - Pending Orders

Nobody will guarantee a stopp when the market is closed, nobody, if you led an open position to a closed market start praying it doesnt go back, it can erase your account.

What about when you are trading longer term, like 1 week or 1 month? Of course you keep the order open, the stop is there for when the market next opens but if it gaps in the wrong direction, it sounds like your *****/.

 

[ns1000]

Short answer, in the example given (opening stop at 100, gap to 90), you'd be filled at 90, or thereabouts.

If you had a guaranteed stop order with a spreadbet company at 100, you'd be filled at 100. Guaranteed stops are only offered to close positions, so you couldn't open a trade with one.

 

[raysor]

Short answer, in the example given (opening stop at 100, gap to 90), you'd be filled at 90, or thereabouts.

If you had a guaranteed stop order with a spreadbet company at 100, you'd be filled at 100. Guaranteed stops are only offered to close positions, so you couldn't open a trade with one.

Ok, so you can never stop learning!
I still don't get it though.
The stock is 110 but you put and order on for the morning to sell short with a stop at 100 (why not go short at 110?)
If the stock gaps to 90 you get filled (?)
Is that what you wanted?
Alternatively the stock opens in the morning at 110. You don't get filled??
What are you hoping to happen?

 

[SanMiguel]

Ok, so you can never stop learning!
I still don't get it though.
The stock is 110 but you put and order on for the morning to sell short with a stop at 100 (why not go short at 110?)
If the stock gaps to 90 you get filled (?)
Is that what you wanted?
Alternatively the stock opens in the morning at 110. You don't get filled??
What are you hoping to happen?

Well, maybe there's support at 105 and I want it to break through first. Plenty of reasons.

 

[barjon]

raysor - something like this?

Ok, so you can never stop learning!
I still don't get it though.
The stock is 110 but you put and order on for the morning to sell short with a stop at 100 (why not go short at 110?) 'cos 100 is your trigger price, maybe a break of an earlier low or something like that
If the stock gaps to 90 you get filled (?)...and curse
Is that what you wanted?
Alternatively the stock opens in the morning at 110. You don't get filled??'cos your trigger price hasn't been reached
What are you hoping to happen? stock opens above 100, trades weak and triggers your sell order, then drops like a stone

 

[barjon]

oops - sm got there first!

 

[raysor]

oops - sm got there first!

OK same scenario but you are short at 110
Opens at 110: cut it or whatever
Opens at 90; Buy back or run it
Opens at 100; Buy back or whatever.

 

[barjon]

raysor

1. whatever - won't be shifting stoploss
2. cover half if that's beyond my target area and move stoploss to target level on remainder
3. whatever - move stoploss to just above gap fill. If some fading of the gap and it remains unfilled after an hour (and there's suitable action in lower tf) then add some.