Holding over the weekend? What a gap does to your stop

You held your trade over the weekend. Monday opens with a gap.

Your stop didn't protect you. Here's why.

Markets close on Friday and reopen on Monday. The news doesn't stop in between.

So Monday can open far from Friday's close. That jump is a gap.

Real euro-dollar chart. Friday, October 16. You buy at 1.1235.

Stop at 1.1210, under the last low. That's 25 pips of risk.

Euro-dollar, 1 standard lot: price moves 1 pip, that's 10 dollars. 25 pips, 250 dollars.

Friday closes at 1.1239. Monday, October 19, opens at 1.1197.

That's below your stop. No trades happened in between.

Your stop fills at the next price, around 1.1197. Not at 1.1210.

You planned to lose 250 dollars. You lost about 380.

A stop limits the damage while the market trades. It can't stop a gap.

So before the weekend, decide. Close the trade, or cut the size.

At half the size, the same gap costs about 190, not 380.

Save this. Gaps jump over stops. Stops fill at the next price. On Friday, close or cut size.

Your turn. Do you hold trades over the weekend? Never, sometimes, or always? Comment below.

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