|
Stop and limit orders during weekend and
holiday hours work different during times when some or all of
the markets are closed. When trading is halted due to a
holiday or weekend, it is important to note how stop and limit
orders are treated.
If the currency cross opens at or beyond
your stop or limit rate then your stop or limit will be filled
at that opening market rate. This means that your stop orders
may be filled at rates that are poorer than the order rates.
Likewise, your limit orders may be filled at rates that are
better than the order rates.
See the example below:
EUR/USD closes at 1.2400 on Friday.
GBP/USD closes at 1.7650 on Friday.
You have a Buy Stop on EUR/USD at 1.2425.
You have a Buy Limit on GBP/USD at 1.7625.
When the market opens on Sunday the
following are the opening market rates.
EUR/USD 1.2436/40
GBP/USD 1.7600/05
Therefore, your EUR/USD Stop will be filled
at 1.2440.
Also, your GBP/USD Limit will be filled at 1.7605.
You can see from the above example that
leaving Buy Stop and Buy Limit orders over the weekend can
cause unforeseen risks to forex traders.
This is a
FTI Training Ltd Website © Copyright FTI Training Ltd t/a
Forex Worldwide Training and Support. 2003 |
