I am wondering if someone would be so kind to please explain me:
Different brokers have different specifications. E.g. spreads, BID and ASK prices at the same time for same currency pair, swaps, spread, lags, slippage, stop buy/sell minimum distances and so on. I have seen few situations when broker executed my stop pending position even if price has never reached particular price level.
My question: Is it true that when stop pending position, either stop buy or stop sell, gets executed, then either immediately or first second the current profit will ALWAYS be negative (so current loss) regardless of anything (e.g. broker name, currency symbol name, slippage, extreme volatility, timing, spread,…)? So I’m asking if there is any exceptional case when position, immediately, when it gets executed from being stop pending, it is already in profit? Or does it always ‘‘start’’ to be executed as being in loss (current loss)?
Example: stop pending of either buy or sell. It gets executed and then the most ideal trend direction you could have ever imagined and extreme volatility occurs. Very very very soon your current profit, in ideal case on that opened position (executed from being stop pending), starts to rise. You are making very huge profit in very little time due to so strong/fast trend in your wanted direction. Would such position START to be executed in loss? Or is there any exceptional case where position would be, as soon as being executed, already in profit?
If someone could please answer my question and then I will give you the reason why I am asking it (the idea behind my question). Would just like to know the answer if such thing could ever happen.
At the instant you open the trade, there is always a small unrealised loss showing. This is due to the spread. The broker can widen the spread as much as they wish, as often as necessary and without notice. It also won’t show up on charts which just show a single price, usually the bid price, the price at which you go short or close an open long position. So if your stop is close to current price and you hold across e.g. NY close or a news announcement, the stop can easily be hit.
I think the only way to know your broker’s spread patterns is to watch the bid/ask quotes rather than the chart at the time of interest.
Thank you for your reply. I wasn’t directly asking anything about Spread.
The key word you mentioned is the one in your first sentence and this word is “always”
I really hope this is true: so I really hope that stop pending order is never executed immediately in profit but either:
A) goes from current loss to zero and then from zero to current profit. By the word ‘‘current’’ I am obviously referring to opened position.
B) while being in current loss, it exceeds zero without even ‘‘touching’’ it and goes directly to profit
both A and B scenarios are of course wanted (ideal) ones.
Why am I asking (and hoping!) that stop pending position is always executed in current loss? It’s a form of self-protection via the following way: Doing that work on demo account only as a test how event will impact the trend. When current loss goes to current profit (regardless if ‘‘touching’’ zero or exceeding it), this is a sign that trend has a high chance of going into the way where stop pending position was executed. Then I open immediately ( ! ) matching position, with identical SL/TP/Trailing parameters, on real account but obviously market position instead of stop pending.
As extra security I can put on a condition like: if within X time period, the current profit (above zero) was active for at least Y % after exceeding zero, only then market position on other MT4 terminal can be opened on real account. Example: X = 3 minutes, Y = 80 %. This would mean: for first 3 minutes, starting to count when current profit is at least 0.01 (currency as on trading account), the current profit must be for at least 80% out of those 3 minutes above 0.01 (obviously it will be much more). Only in this case trend can be considered as reliable enough and then market position opened on other MT4 terminal on real account.
