Question About Stop Loss

T

trucaKe4

Hi all.

Suppose I buy a stock at 1070.35. I have placed the stop loss for this trade at 1062.50. The next day, I see that the opening price of the stock is 1059.25.

My question is - does the stop loss get triggered automatically the next day, since the open price is 1059.25 and this open price is below my stop loss point @ 1062.50?

Can anyone shed some light into this situation? Thanks.
 
Your stop loss should trigger whenever price is beyond it. If you get fill or not depends on the market and your price.
 
Simples said:
Your stop loss should trigger whenever price is beyond it. If you get fill or not depends on the market and your price.
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Don't you mean if it gets filled is dependent on if it's a stop loss vs a stop limit order?

A stop loss order takes market price whatever that is below your stop,...frequently filling at the bid price someone else is willing to pay. A stop limit prevents that by you determining what price you are willing to sell. Unfortunately in a gap move like you describe your limit price may never get filled and you may have further losses until if and when it returns to your limit price. You have to choose both stop and limit prices wisely.
 
eganon69 said:
I understand the emphasis but someone with 2 posts like the OP likely does not know the difference between stop loss and stop limit order. Just trying to be constructive here,...
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You seemed to post as though you were correcting @Simples, as oppose to just adding constructive information.

Your intent would have been clear had you stated to the effect of, if not in these exact words, "In addition to what @Simples says ...," rather than "Don't you mean..." Just an observation. :)
 
It was not meant as a correction but more pointing out the nuances between the two. But I understand your point. Something is frequently lost in translation when speak in text.
 
Was attempting just to get the OP on track with his question. Of course, reality can be very nuanced. Broker and exchange may invalidate or "forget" your stop loss for various reasons. Wether you get fill or not depends on order price and how long the order will live, after trigger has been triggered.

You can probably write entire books on the subject of various execution on exchanges. As it stands, very little one can do to protect against overnight gaps before the fact, unless one sells before that for some reason. Sometimes just not possible for trend trading when price gaps down hard right after a rally.
 
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