Stop loss in After hours trading

Hi I’m wanting to know if the freetrade plus stop loss feature will work if there is a drop in after hours trading

E.g. Fastly dropping over 30% last night.

If I had a 5% drop stop loss would it have triggered?

I think it would have activated today at 14:30.

So then that means it would not have worked

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In what way? If it drops overnight and triggers when trading opens then isn’t that it working?

Just to say, stop loss is not a great way to make money. If you believe in what you invest you should just wait. In the vast majority of cases waiting gives much better return than stop loss.

Fastly has a better average 12-months-price-target.

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But it’s gapped through his 5% stop loss overnight in AH which he can’t be involved with. So when it opens already down today at 30% loss his stop loss kicks in and he’s lost 30% and not the 5% he thought he was protected by. Kind of makes the stop loss pointless in this scenario and doesn’t offer the protection he thought he had?

Unless I’ve completely misunderstood?

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It doesn’t kick in in after hours markets because FT don’t offer that functionality, mainly due to the lack of liquidity in pre and post market.
It’s pretty naive to assume that your stop loss will cover you in every eventuality, but then again maybe that’s why it’s on Plus rather than the free plan :v:t3:

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A stop loss triggers when the stock falls below your stop loss price, it then sells a the next available best price. That’s the price when trading opens for the exchange its on, not your stop loss price.

Its just a logic instruction. If the price falls below x at any time, then make a market order to sell at the next best price.

Freetrade have the stop loss information on their order execution policy as well

Limit and Stop Loss Order

A Limit or Stop Loss Order is an order to:

buy at a price equal to or below the Limit Price set by you (a Buy Limit Order);

sell at a price equal to or above the Limit Price set by you (a Sell Limit Order);

or sell at a price equal to or below the Stop Price set by you (a Stop Loss Order).

You can only cancel a Limit or Stop Loss Order up until the point it is triggered.

Once the order has triggered, it is not possible to cancel.Buy Limit Orders and Sell Limit Orders will only execute at or better than the Limit Price set by you.

Stop Loss Orders will not necessarily execute at the Stop Price set by you and will often execute at a lower price, due to the inherent nature of moving markets and the price at which our market counterparties or other market participants available to us are willing to buy at that time.If the observed market price reaches the Limit Price or Stop Price you set, it will not always mean that your order will be executed, for example, due to differences between price data and the prices at which our market counterparties or other market participants available to us are willing to buy or sell.

You should be conscious to accept the risk associated with this type of instruction. Freetrade will not be liable for losses incurred due to the selection of the Limit or Stop Loss Order types, save any assessment made by us that we have fallen short of our best execution obligations.

Your order, regardless of type, will only be carried out if all of the required shares are available to be purchased in the market, i.e. your order will never be partially filled. This is known as ‘Fill or Kill’. Catchy name.

Out of curiosity which stock fell 30% outside of trading hours?

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Let’s be realistic though, many of the big moves happen in after hours, often like in this case where results or M&As are announced after initial trading.

Like you say as long as people are aware, the stop loss wouldn’t have done the job he was hoping for in this instance. Not a FT issue ofc just a in hours market limitation.

Yes I’d agree the biggest moves are outside of market hours. But I think this comes back to the point that FT aren’t a platform for traders which arguably you are by buying and selling on news/results rather than investing for the long term.
I personally don’t use stop losses because of the risk of them being triggered and the SP then rebounding meaning you have to buy in at a higher price (I’ll sell when I want to based on what the market is doing).
I think you’re right that we need it to be clear to customers what these different orders do and what the limitations of these are but at the same time the investors have a responsibility to educate themselves.

I’ve found the execution policy to be pretty clear at explaining how all the order types are executed, so its definitely worth a read. Probably should be more prominent when people sign up.

Completely agree with you. I’m like yourself a longterm investor so have little interest at present in stop losses although I do feel like in this instance many may not fully understand the limitations and instances where they are not as fully protected as maybe they thought.

As an aside a stop loss on one of the tech darlings of 5% unless swing trading constantly seems a bit counter productive at best. Swings of 5%+ seem to be common with some of these stocks daily.

Yeah maybe something like a quick intro when signing up for plus would be good.
Btw the drop after hours was for Fastly after they changed their forecast for Q3 results due to one of their main customers (Tiktok) not requiring their services as much as previously thought.
Dragged all the cloud computing stocks down with it (but a nice chance to buy the dip on NET!)

This was theoretical question as I didn’t know what happen.

So 5% or 500% doesn’t matter. Thanks to those who helped me understand.

Should definitely find those documents that explain it all clearly.

But FreeTrade makes investing open to novices which is why I come to the community to help better understand

And feedback like this helps me decide if the £9.99 a month is worth it or not

And once fastly shot up over 50% I could just imagine a drop coming soon. So once those gains had happened , something like 10% stop loss would work for me since it was a bit of a gamble on them anyway