Trailing stop

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jonnes belt
12
jonnes belt  

Hello Members,

Anybody understands why trailing stops do not execute on crash and boom? They always get stopped out where the spike ends. Somebody want to comment on this and share an opinion? I will highly appreciate. Thanks..

Juvenille Emperor Limited
Moderator
13049
Eleni Anna Branou  
jonnes belt:

Hello Members,

Anybody understands why trailing stops do not execute on crash and boom? They always get stopped out where the spike ends. Somebody want to comment on this and share an opinion? I will highly appreciate. Thanks..

What is 'crash and boom'?

If you mean why trailing stop loss and stop loss levels in general are not always respected in times of high volatility, this has to do with the fast movement of the market and the lack of liquidity from the brokers in order to fill all trade requests at all levels from the current price before the incident to the end of the spike, when its formed.

Carl Schreiber
Moderator
10118
Carl Schreiber  
A stop order becomes a simple market order as soon as the price has passed to stop price and i execute that way by the broker. If there is a (huge) gap between the before and after the cross (because e.g. the broker stops providing prices for a while) you can get filled quite far away from what you expect/think/hope.
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