IB: futures stop loss orders in gap openings

Discussion in 'Order Execution' started by pcvix, May 20, 2006.

  1. pcvix



    When one has a catastrophe stop order placed, and there's a huge gap opening as a result of, say, a black swan event, such that prices drop way below the stop level, will such stop order still be executed at the first opportunity on the IB platform?

    As an example, say one is short one Euro FX contract (6E) at 1.2750 at Friday's close, with a GTC stop loss order at 1.3000. Something happens over the weekend and the Dollar drops precipitously late Sunday, and 6E opens at 1.3250 at 6:00pm EST. Is it likely that the stop loss order will be executed at first opportunity at market?

    Liquidity will of course be an issue but, for the sake of discussion, let's focus on the most liquid futures products.

    Does anyone have any insight into or experience with this scenario? Perhaps an IB representative can shed a little light on the matter?

  2. This is platform dependant, that's what a stop order is. By definitiion, once the stop price is hit, it turns into a market order. If the market opened limit up, it would be executed at that level.

    IB does have a few adjustments like good till canceled versus day only. Also, you can adjust whether the stop price is the last traded price or if price needs to be ticked at twice etc.