Stop & Limit Orders

When trading is halted due to a holiday, weekend or during times when an exchange is closed, it is important to note how stop and limit orders are treated.

If your position opens at or beyond your stop or limit rate, your stop or limit will be filled at the opening market rate. This means that your stop orders may be filled at rates that are poorer than the order rates. Likewise, your limit orders may be filled at rates that are better than the order rates.

See the example below:

Crude oil closes at 85.20

You have a buy stop on crude oil at 86.00.

S&P 500 closes at 1517.23

You have a buy limit on S&P 500 at 1516.61.

Crude oil opens at 87.65

Since the crude oil market opened past your stop price, your stop order will be taken to market and filled upon the opening of the market. The price your position is filled at may differ from the opening rate set by the exchange.

S&P 500 opens at 1511.29

Since the S&P 500 market opened past your limit price, your limit order will be taken to market and filled upon the opening of the market. The price your position is filled at may differ from the opening rate set by the exchange.

You can see from the above example that leaving stop and limit orders over the weekend, holiday, or times when the exchanges are closed can cause unforeseen risks to futures traders. Please note that although this is an example of how stops and limits work when the markets are closed, slippage can occur at any time during the trading day.

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