Guaranteed stops secure the price a trader can exercise their stop loss at.
In this tutorial, we’re going to a place a guaranteed stop loss order on an open position.
In a previous tutorial, we bought Euro Dollar and put a stop-loss 45 points away. We’re going to use this position to add our guaranteed stop loss.
From the open position window we click on the amend button and the full opens. You will then notice the existing 45-point loss is still in place, and we’re going to change this to a guarantee to stop, that will override the existing 45 point stop-loss. Simply click on the Guaranteed button and you will notice it defaults to a minimum of approximately 180 points away. 180 points is one and a half percent of the currency pair’s current market price and it’s the closest you can place a guaranteed stop-loss.
A guaranteed stop-loss is used to avoid significant gapping when a currency pair may close at one price on the Friday and then open higher or lower on the next trading session by more than 180 points. If the market gapped 400 points and we had a standard stop loss in place, then we would be executed and filled at first available price level at which there was liquidity. With a guaranteed stop at 180 points, if the market did gap 400 points, then we’d be guaranteed our price 180 points away.
So, let’s keep our guarantee stop at that level of 180 points and click Submit, to submit the order. Now you’ll notice the trade has now been amended with our stop-loss in place. You should also notice in the open positions window, that’s our stop-loss now, has a G beside it in brackets to indicate that this is a guaranteed stop currently in place on the trade.
So that’s how we place a guaranteed stop-loss on an existing open position. We look forward to see you in the next tutorial. Thank you.