Gapping and slippage
However, it’s worth noting that stops don’t always close your trade at exactly the level you specify. The market may 'gap', which means it jumps from one price to another with no market activity in between.
This is most likely to happen when you keep a trade open overnight or over the weekend, when the market’s opening price may differ from its previous closing price. In this situation, your trade will be closed at the best available price, meaning you risk losing more money than you’d anticipated. This is known as experiencing slippage.
Protecting your stop
You can ensure your stop is executed exactly where you’ve specified by changing it to a guaranteed stop. However, unlike normal stops which are free, if they are triggered you will be charged a fee for using them.
Other ways to use stops
As well as using stops to close a position, you can also open new trades with them. These are called 'stop entry orders'.
A limit is the opposite of a stop, set up to close your trade automatically after you have secured a certain amount of profit.