Inappropriate Stop Loss Triggered

This is the thing. Your stop loss order was a willingness to sell

You gave an explicit instruction to sell

I do understand your frustration though, and continue to explore with Freetrade the issue around your sell order. But you did create an order to sell, at any cost. So there was a willingness and an intention

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What I’m saying is a buyer can’t just put a bid in a £15 and trigger your stop loss and buy your shares, unless there are no higher bidders in the market.

The stop loss is there to sell your shares if the price drops below a level. because there were no orders higher than ÂŁ15 the price did drop below that level. If there had been existing orders at ÂŁ18, someone throwing a cheeky bid at ÂŁ15 would not have triggered the stop loss

The fact that it was quite far below your stop loss price is because that was the only available buyer at that moment. this is called slippage.Once triggered It will sell the shares at the best available price, but if no one is willing to pay your price it will go through at the lower price. Some brokers do offer guaranteed stop losses, These guarantee that you will get your price, but usually there is an extra cost to this (eg. a fee) to cover the broker for any losses they make due to slippage. As far as I know the Freetrade ones are not guaranteed

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I guess the confusion here is what is meant by price; just because a bidder bids x doesn’t make the share worth x does it unless someone is willing to sell at that price and Freetrade effectively said yes I’m willing to sell but in reality I would not have accepted that trade.

Agree I did have a willingness to sell but it was the situation in which the sale would/should occur that I have a problem with and the fact that it seems to be tied to the mid price rather than the last price. Which for me means the difference between sell if the price (i.e. last price which is all a user of Freetrade sees as far as I’m aware) reaches this level but it actually meant sell no matter what if there are no bidders bidding above my limit, these to me are very different situations.

A stop loss is used to dump a falling share and get out of the position in order prevent the risk of a loss turning into a much bigger loss. I would suggest not using them in future as it sounds like that is not what you want. for what it’s worth, I don’t use stop losses.

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Same thing happened to me. Like you, had to raise a ticket and got the screeshot which showed price dropping below stop loss for few miliseconds.
Anyway I was happy with FT’s response.

What is puzzeling is

So I had a stop loss set at ÂŁ17.61 on ÂŁSSLN (IShares Physical Silver) and this triggered at 13:30 on 31/3 despite from what I can see the low for the day being ÂŁ18.42

Why is this low price not reflected in public data ? Even on LSE web site low for the day is shown 18.42. Is this drop in price not considered?

If I understand things more fully now then I believe public data is generally last price and maybe like you I assumed Freetrade stop loss was based on the last price and protected the user to the downside (like a human would do i.e. the share price is falling below X so I think it’s time to get out now).

What it actually means is that I want to sell and as soon as the highest bidder is offering below my stop loss then sell no matter what (I can’t be clear if they are using the bidder’s bid price or the mid price (middle of the spread between bid and ask).

These are fundamentally different strategies and the latter requires data which I don’t see as available in the public domain (would love to know if such data is available); also no where in Freetrades’ Order Execution policy is there mention of bid, ask and/or mid price yet that is the evidence provided as proof that my order executed correctly.

Once the stop price is met, the stop order becomes a market order and is executed at the next available opportunity.

When the price was met it turned into a normal market order, and sold to the highest bid on the order book at the time. This is standard for how a stop loss works. if you read the article it sounds like what you wanted was a stop limit order ( not sure if these are in freetrade, i never use them?)

I believe stop losses use the bid price as the trigger, as that’s effectively the best price you can get for selling at that time. but not 100% sure on that, you’d have to ask.

Yes, stop limit is what we assuming going to happen even though FT only offer stop loss. Now we know the difference and FT doesn’t have stop limit (yet!).

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This is useful as I have been using it as a stop limit rather than a stop loss and I didn’t know the difference before either!

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As far as I know stop limit and stop loss orders are still triggered the same way; the difference being that for a stop loss a market order is generated on trigger but on stop limit a limit order is generated on trigger so the latter guarantees a sell price but does not guarantee a sell and vice versa for a stop loss.

The problem is the ambiguity in what triggers the stop; from Freetrade’s order execution policy:

Triggered Order
A Triggered Order is an instruction to submit:‍

a buy order when the observed price during normal market hours falls to or below the Trigger price set by you (a Triggered Buy Order);
a sell order when this observed price rises to or above the Trigger price set by you (a Triggered Sell Order);
or a sell order when this observed price falls to or below the Trigger price set by you (a Triggered Stop Loss Order).

Note the use of observed price as the trigger for the stop; now what does observed price actually mean is the question? It can be reasonably interpreted to mean the price you see in Freetrade i.e. the last price.

Compare this with HL’s statement about stop loss which clearly mentions bid price as the trigger:

Stop loss - An order to sell an existing shareholding which is triggered if the bid price falls to, or below, a price (the stop price) set by you. This could be used when you buy a share to give you some protection and help minimise the loss should the share price fall.

Even Freetrade’s own help articles don’t seem to know as shown in this article:

“If the share price decreases and hits the share value entered, the stop loss will attempt to execute” - Referring to share price

And this article:

“A Stop loss is a sell order that allows a customer to limit their losses on an owned investment if the stock price were to decrease.” - Referring again to share price

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The screeshots provided with the support tickets as proof 9f price shows FT’s stop loss uses ask/bid price.

From what you posted it is seems FT doc need improvment. At least clearly state what they mean by observed price.

I think they are using bid, but at the time of the sale the mid price was below his stop as well, so the screenshot doesn’t prove it conclusively

Actually, it does, at least for that short moment when it’s the sole bidder. That’s the core mechanism of how the stock market works, is it not? In extreme cases, with low-volume stocks, it may be just a handful of bidders and sellers, though normally (and ideally) it would be thousands of market participants creating a “bullet-proof” and indeed a very fair & efficient system, where the thing that happened to you could not happen.

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As an aside trading 212 have double stop loss.
Which goes something like this.
Stop loss set at 100p second, but not lower than 95p.
Not used it or tested it just noticed it.

My point was more that there are two parties to a trade and both agree the amount which then imparts a value. A buyer alone doesn’t dictate the value same as the seller doesn’t.

In terms of my issue having had time to analyse things and collect my thoughts, I’m more concerned about when the order was triggered i.e. the time at which I became a willing seller at whatever price was being offered.

Sounds like a stop limit. First value is used to trigger a limit order, but that isn’t guaranteed to execute by the nature of limit orders.

Hopefully 212 are clear about what price is used to trigger the order.

But the point you seem to be missing is that the order you placed triggered automatically when it went low enough to place it on the market. You were unfortunate that the price offered was even lower than you wanted but there’s no emotion or mistake in what happened unless you’re saying the data was incorrect and therefore both the conversion of the limit order onto the market and the sale shouldn’t have happened?

Unless of course that cheeky buyer is the market maker


Even the market maker can’t just buy anyone share at any price they want if there are existing higher bids. The stock market wouldn’t work if they could do that.

They could buy the shares if there were no higher bids though. Potentially if volume was low enough they could drop the price by dumping stocks to trigger people stops, then buy them up. This wouldn’t work on high volume stocks though.