Why did I get stopped out?

[JG46]

Yesterday evening at 20:30 (ish) I opened a sell on GBP/CHF with a stop at 11429. At about 22:02 (ish, again) the system closed the trade saying the price had reached 11429. But the chart shows that at no point around the 22:00 time did the price go anywhere near 11429. The nearest the price got to my stop was at 22:25 at 11425, well after the 22:02 closure.

Anyone got any idea what's happened?

[ryanair737]

I'm assuming that you are refering to 10pm UK time. At that time all of the major markets are closed and there will be a big increase in the size of the spread. Your chart is most likely showing the mid price. If you change it to the ask price, its up beside the time interval toggle. You will see that price did hit that level around that time. 

[KoketsoIG]

11 minutes ago, ryanair737 said:

I'm assuming that you are refering to 10pm UK time. At that time all of the major markets are closed and there will be a big increase in the size of the spread. Your chart is most likely showing the mid price. If you change it to the ask price, its up beside the time interval toggle. You will see that price did hit that level around that time. 

Dear @ryanair737,

Thank you for assisting  @JG46.

Thanks,

KoketsoIG

[ryanair737]

Hi KoketsolG

I have posted my own query also today regarding spreads but recieved no response. Can you please advise on my post.

Posted 51 minutes ago

I'm hoping someone can help me to understand what causes huge spikes in the spread and how best to trade and avoid being caught out in them. 

I've attached some screenshots of Wesfarmers LTD, a stock in the ASX. When you look at the ask price for 11am 04.12.2023 there is a massive spike in price however the bid price barely moves at all. This would have wiped out any short positions and possibly wiped out their entire account as it would have gapped past their stop and then been executed. 

There is no increase in volume and the market had already been open for one hour before the price change. There was also no earnings or other factors that I can find online which would explain the price move. 

Can anyone in the forum please help me to understand what the reason is for these type of fluctuations in the spread that only last a minute or so?

I've attached screenshots of the bid/ask price for the daily and the 5-minute range.

Thanks

[KoketsoIG]

2 hours ago, ryanair737 said:

Hi KoketsolG

I have posted my own query also today regarding spreads but recieved no response. Can you please advise on my post.

 

Posted 51 minutes ago

I'm hoping someone can help me to understand what causes huge spikes in the spread and how best to trade and avoid being caught out in them. 

I've attached some screenshots of Wesfarmers LTD, a stock in the ASX. When you look at the ask price for 11am 04.12.2023 there is a massive spike in price however the bid price barely moves at all. This would have wiped out any short positions and possibly wiped out their entire account as it would have gapped past their stop and then been executed. 

There is no increase in volume and the market had already been open for one hour before the price change. There was also no earnings or other factors that I can find online which would explain the price move. 

Can anyone in the forum please help me to understand what the reason is for these type of fluctuations in the spread that only last a minute or so?

I've attached screenshots of the bid/ask price for the daily and the 5-minute range.

Thanks

Dear @JG46,

Various factors can cause spikes and can be technical or related to corporate action events. Please submit any error in the chart and spikes to helpsdesk.uk@ig.com for fixing by the technical team.

Thanks,

KoketsoIG

[JG46]

Thanks for the clarifications folks. That actually explains a lot!!!!

[neueneuen]

@ryanair737, if it helps, from my limited knowledge of Australian market and brief analysis,

1. this was not 1 hour after market open - the spike you're showing on the graph happened after 10:05 exchange (Australian) time, this is right at market open; if you have Australian time set up in IG preferences, I think they have an error with backdating DST (daylight saving time) on graphs, that being said apart from the wrong timezone shift their graph is right;

2. this was Monday after weekend - so even more widened spread is to be expected;

3. ASX (primary exchange where this symbol is traded) has a peculiar way of opening the trading day https://www.asx.com.au/markets/market-resources/trading-hours-calendar/cash-market-trading-hours - Wesfarmers would have opened trading between10:08:45-10:09:15 exchange time, before that market depth (bid/ask) is auction style, no trades are being executed, price discovery is happening for market opening; as far as I can tell this day trading for this symbol opened between 10:08:45-10:09:00;

4. as far as I can tell, at market open (around 10:08:45-10:09:00) bid-ask for this symbol narrowed to normal, so one could not actually trade at the spiked price you're showing; unfortunately, it was long ago so I cannot check precisely what bid-ask was exactly prior to the first executed trade;

5. I have not been in such a situation, but I guess the very worst that could happen is the market depth during auction might trigger stops/close out (as you say) but it would get executed with normal, not spiked price; which is very much not ideal but not as bad as you describe; any worse execution would open IG to complaints of mispricing as there was no way to execute a trade at the spiked price on the underlying market; OTC execution might be problematic here; but I hope IG knows about this peculiarity of ASX exchange and does not even trigger stops/close outs before auction on market open has ended.

 

It would be interesting to get more first-hand information (what would have happened) on point 5 directly from IG.

 

In short, the displayed spread is not IG error, this is the way ASX exchange works, but it should not create any problems.

Edited July 19 by neueneuen

[neueneuen]

P. S. This spike is not visible on CFD account graphs (which is likely deemed OTC execution even if they trade underlying themselves mostly on ASX), so I think IG (or their pricing provider if any) knows how to handle auction before market open on ASX.

Edited July 19 by neueneuen