Gapping markets

Can anyone answer this ?

If I have an open position with a stop loss set over the weekend when my broker is closed, if the market opens lower on monday what happens to my stop loss ? Will my position be closed at that point or the opening price on monday ( with a greater loss to me )

sorry if this sounds confusing but I cannot get my head around this one

peter

Pangor

It is to my understanding like any other market. If you leave a stop loss order over the weekend and it gaps the amount of your stop loss on open Sunday you will get stopped out in the trade. Best to either close the trade out or expand the stop loss.

Can’t see a broker on close friday leaving your position open but killing your stop loss order, what if it went too bad they just let you swing to a margin call over your stop loss. Gaps kill everyone in stock market daily, luckily only have one gap to worry about a week in forex.

Your Stop Loss will remain in effect, but won’t be executed when the markets are closed.

So, when the market opens on Sunday night, and the opening price is lower than it was when the market closed on Friday, then your Stop Loss would be executed Sunday night.

Keep in mind that there could be a huge gap over the weekend and your Stop Loss may not even be touched, meaning you could lose a lot more than your Stop Loss.

For example, say you’re trading the GBP/USD. Friday the market closes at 2.0150. Your Stop Loss is 2.0. If, when the market opens on Sunday, the price is 1.9, then your position will be closed at 1.9, not 2.0!

That’s why most traders always close their positions before the market closes on Friday, to avoid potentially huge losses over the weekend.

Hope this helps.

Terry

terry, Kangi

thanks for that, thats what I was afraid would happen !

( so much for those guarantees by the brokers, all will be in the small print I expect )

peter

Pangor

Yeah man feel ya. Investments can be difficult to swallow when you even follow a stop loss rule, and like in2blue pointed out blows right over your stop loss. It is something that everyone has to deal with regardless of which market you invest with. It’s in the fine print of every market.

Hopefully your stop loss isn’t tight against a margin call also, that would mean you was risking the whole shabang as the stop loss. ;o(

Which is something Babypips doesn’t preach doing. ;o)

Equities I’ve lost countless money due to gaps taking everything I gained the day before. Really hate gaps to no end.

wish you the best.