⚠️Price Gaps

Exercise caution while keeping trades open after market hours

Caution: Price Gaps

One of the most significant risks associated with the forex and metals market is the potential for price gaps. A price gap occurs when the market opens at a significantly different price level than where it closed.

This can happen due to various factors, such as:

• When economic data is released – particularly if it contains data that the market isn’t expecting

• As major news events are announced, particularly global and/or unexpected news

• When trading resumes after a weekend or holiday—especially if major news is announced in that period

As a practical example, our team found that on average, EUR-USD had an absolute price gap of 0.40% over the last year. This means that as a trader if you were using 10x leverage on a long EUR-USD position, and the price moved down 0.40% the next day, the effective PnL impact would be -4.00%! If your stop loss was set at -3.00%, it would not execute there, it would instead execute at -4.00%

Price gaps can cause significant losses or gains for traders who have open positions. Exact stop losses and take-profits cannot be guaranteed because of these price gaps (as a certain stop loss or take profit might be "skipped" because of the gap, effectively filling at a different price than expected). We recommend exercising caution while keeping trades open after market hours (especially because leverage can amplify gains or losses). Read more about price gaps here

Stop losses and take-profits cannot be guaranteed at the requested price, because of price gaps (as a certain stop loss or take profit might be "skipped" because of the gap in opening versus closing price, effectively filling at a worse price). We recommend exercising caution while keeping trades open after market hours to prevent unexpected gains or losses