Slippage

[Ferru]

Is it worth using a guaranteed stop loss to prevent slippage? I'm with IG Index, and their addition to the normal spread for having this protection is quite high. However, I don't want to risk being landed with a big bill if the instrument I'm trading on drops like a stone and my stop doesn't get hit.

How likely is this to happen?

Thanks in advance.

Jeff

 

[Adamus]

What is a guaranteed stop loss then, for someone who never tried spreadbetting?

 

[new_trader]

What is a guaranteed stop loss then, for someone who never tried spreadbetting?

Your STOP will be executed at the exact price you specify, no slippage.

 

[UKtradergirl]

Ferru- if you are daytrading then i wouldn't use guaranteed stops.

If you swing or position trade it may be worth a go, especially in the current climate where you can see huge gaps overnight.

 

[Ferru]

Thanks UKtradergirl.

I'm mainly an evening trader. Does it ever happen that there is serious slippage on a major instrument? I just don't want to end up getting charged for 100 pips when my stop loss was at 10 pips!

Regards

Jeff

Ferru- if you are daytrading then i wouldn't use guaranteed stops.

If you swing or position trade it may be worth a go, especially in the current climate where you can see huge gaps overnight.

 

[UKtradergirl]

yes it can and does happen overnight at the moment, especially at weekends.

When things settle down again (could be a long time at this rate)- it's not so risky- but right now-- yes, big moves very possible, and very frequent.

 

[N Rothschild]

sure does happen, especially on the more valuable stocks which can gap a few dollars at a time overnight...can make a real mess of your account!

 

[Adamus]

Zero slippage? So what is their 'addition to the normal spread'?

 

[new_trader]

Zero slippage? So what is their 'addition to the normal spread'?

With IG index a bet on the SPX500 Futures:


- Guaranteed Stop (Extra spread: +/- 0.5)
- Min Stop Distance 5 points

 

[Adamus]

Hmm. I think I might wait until they offer zero spread as well

 

[Ferru]

Thanks for your replies guys.

With a major instrument, does slippage only happen when there are big and short-lived spikes in the market, or when it opens at a much higher or lower price than it closed at the end of the previous session?

It is just me, or does IG Index's guaranteed stop premium resemble an extremely overpriced insurance policy?

Regards

Jeff

Hmm. I think I might wait until they offer zero spread as well

 

[Adamus]

Just ignore me, I've no idea really if that represents a good or a bad deal. Do the sums and see how much extra it's going to cost you with your strategy, and whether your strategy is profitable enough to make it worth it.