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GBP USD minimum stop level of 139.053 points


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Good evening everyone,

My first post from a demo account while I am waiting for the real account to be opened, I have focused on cable as I like both currencies and the market is mostly very active.

Does anyone know why the market should suddenly require a limit stop of139.053 points away from the current market price?

It seems a little excessive to me.

Your valuable knowledge and experience maybe able to explain this to a newbie?

332749858_139.005slimitrequirement.thumb.png.6a6ce614a4b4407fff03e3d72e23d776.png

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On 04/05/2021 at 07:51, Guest Harith said:

You have selected guaranteed stop.

Yes I am aware that I have selected the guaranteed stop level as I have been for a while in preparation for when the live account is approved, the live account will have to use a guaranteed stop on each trade, which I think is a good idea as it reduces exposure to risk and the margin required as it is a controlled risk as apposed to an uncapped or un controlled risk.

Normally the stop limit on this trade is a minimum of 8 points, in this screen shot it it is set at 30 points which has increased the required margin to $1775, when it is at 8 or 10 the margin would be around $1300.

If I set the stop to 139 points the margin will increase to $17,000 or more, obviously blocking the trade with a $10,000 account fund.

Thank you for your suggestion,  however it isn't because I have selected a guaranteed stop as I normally do.

having given this some thought, I guess if there is excessive price volatility / uncertainty, as there is when the price is at 1.39000 the system sets the GSL very high for protection, the price could easily run away, that being said if it was hit at 139 it would lead to a massive loss, maybe $7000.

 

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  • 2 weeks later...

A higher than normal spread generally indicates one of two things, high volatility in the market or low liquidity due to out-of-hours trading. Before news events, or during big shock (Brexit, US Elections), spreads can widen greatly. A low spread means there is a small difference between the bid and the ask price.

From google

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  • 1 month later...
On 13/05/2021 at 16:45, dreamingmonkey said:

A higher than normal spread generally indicates one of two things, high volatility in the market or low liquidity due to out-of-hours trading. Before news events, or during big shock (Brexit, US Elections), spreads can widen greatly. A low spread means there is a small difference between the bid and the ask price.

From google

This is not the spread or difference between the buy and sell prices, this is the minimum stop limit applied by IG which will price you out of some of the deals when the minimum is too high, IE.139 points in this case or higher.

The minimum stop limit of say 8 points is also set up to take you out, the market can easily swing 8 points in either direction and take your deal out with a stop loss being reached.

The higher the stop loss, the less risk of it being triggered, even if the market goes against you, just ride it out and wait for the market to change direction in your favour?

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