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Stop losses and gapping in the market


Guest Dan

Question

A spread bet question relating to a stop loss where the guarantee function has not been used. Say you were in a share at 2900 with a stop loss at 2800. All was looking good, but then the next morning the market gaps and opens at 2400. Does your stop loss activate at the set 2800, or will it trigger at the opening level of 2400, a massive 400 below your stop loss (it is likely you wouldn’t even have enough money in your account to cover this !). Can you advise what would happen in this situation ? Thanks , Dan

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5 hours ago, Guest Dan said:

A spread bet question relating to a stop loss where the guarantee function has not been used. Say you were in a share at 2900 with a stop loss at 2800. All was looking good, but then the next morning the market gaps and opens at 2400. Does your stop loss activate at the set 2800, or will it trigger at the opening level of 2400, a massive 400 below your stop loss (it is likely you wouldn’t even have enough money in your account to cover this !). Can you advise what would happen in this situation ? Thanks , Dan

Hi Dan

Thanks for your query, 

Your stop would trigger at 2400. This is what is referred to as slippage. Guaranteed stops on the other hand incur no slippage. In the ESMA regulated regions we have negative balance protection which would bring your balance from a negative to zero. Please see below links further details on stops, slippage and negative balance protection:

https://www.ig.com/uk/glossary-trading-terms/negative-balance-protection

https://www.ig.com/uk/help-and-support/spread-betting-and-cfds/orders--stops-and-limits/what-is-a-guaranteed-stop

https://www.ig.com/uk/trading-strategies/what-is-slippage-and-how-do-you-avoid-it-in-trading--190319

All the best

Anda

 

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