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Placing a Stop-Loss that is rejected and not filled,turns to Limit only?


I have read that the CME could turn a stop-loss limit to just a limit. Could you explain?


Hello @Shiv,

The situation that you are referring to is where you have a sudden gap move up or down, and your stop-loss did not trigger because the price has exceeded the limit that is attached to the stop. BTW, each stop-loss order does have a limit attached to it. The CME connects a threshold based on what they consider a reasonable range. In our opinion, they do that because there could be spikes or downturns that are temporary. The idea is to let you get out at a fair price.

However, this also means that your stop could be “skipped” and turned into a limit order if the price has exceeded/gapped beyond the stop. The explanation above has been provided to us by the exchange when this happened.

Our situation was in the Mini-Gold where we had Sell Stop-Loss and which was not triggered. The gold price gapped and turned into a limit order as far as we recall. Later, we had to exit at the market price.

We must say that these situations do not happen often, BUT, we this is why always urge traders to be attentive to the markets and their orders.

Thank you,
Matt Z
Optimus Futures

The placement of contingent orders by you or broker, or trading advisor, such as a “stop-loss” or “stop-limit” order, will not necessarily limit your losses to the intended amounts, since market conditions may make it impossible to execute such orders.