Stop loss warning!

I learned an expensive lesson this morning. I set a stop loss at approx 5% but my shares were sold at a 20% loss! I understand that the market can fluctuate dramatically but this particular ETF only dropped 20% after the coronavirus crash so to drop that much this morning is very suspicious!? To make it more frustrating the Freetrade chart shows that the price hasn’t even dropped more than 2% today, that would mean if it did drop 20% it went immediately back up again!? I conclude that there are only 2 explanations for this:- 1. The Freetrade system had a glitch and carried out this sale incorrectly(my M&S shares did recently go up 20% for half an hour!). OR 2. These sudden drops are purposely engineered and algorithms can kick in and buy up stop losses at a big gain.
If this 2nd reason is the case then it means that I mistakenly thought a stop loss would stop me losing as much money should the price drop. In reality the stop loss ended up costing me a lot more.
I wanted to warn other users if like me you are upgrading to the Freetrade Plus account to be able to set a stop loss. You need to be very careful with it. I’m going to cancel my Plus account and go back to the regular account.

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Do you mind sharing which stock this was?

EM Internet and E-commerce ETF

Something doesn’t seem right:

What was the execution price?

A stop-loss can fail as a loss limitation tool because hitting the stop price triggers a sale but does not guarantee the price at which the sale occurs. In shares/ETFs with poor liquidity this can result in large price moves but this seems disproportionate.

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Does your buy price (or average buy price) and sell price look accurate? If so, what were they?

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£9.325

What time?

Buy price £11.585
Sell price £9.325

9.51am today

Seems odd as that hasn’t been the price (sell) since June at least. On your sale contract note in-app, it says £9.325?

People did indeed sell/buy for this price

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I would query this in app just to confirm there have been no errors because this does seem unusual. That being said a stop loss only initiates the sell and so does not ensure any price.

This can mean, in low liquidity stocks/ETFs, large price swings. I think you might have just ended up on the bad side of a poorly made market.

As @Eden said that was an executed price so if your volume matches one of those trades there was likely no technical error just bad luck.

Yes that’s right

How strange! Definitely drop a message in-app and see what they say. Please post the resolution here too so we can understand as a community (and newbies to stop losses) what the pitfalls could be.

The pitfall to a stop loss is you have no idea the price of execution. In bad market swings with low liquidity this can cause people to lose out.

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This is what im wondering as well

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I imagine if the OP checked the underlying volumes at the time it would show these volumes as relatively low.

With the exception of a handful of larger trades they’re all really low today

Freetrade use various market makers? I wonder if this is a case of a poor/only price at the time from one of them

In any case worth asking Freetrade about the details of this transaction

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Even if they’d checked, they’d see every single trade (albeit low volume) up to that point had been above 1,150p.

You can’t predict anything obviously with stocks, but all trades AFTER @DCL9 executed have been above 1,150p too…

Very strange, and a bit scary.

Each trade is a new reference point and in a low volume market this difference can be even more pronounced.