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qwerty369

Joined
29 September 2022
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This is a trade I made in my CMC CFD trading account yesterday...

Stock: CNU (ASX)
Stop loss $6.28
Position closed out on 28/09/2022 at $6.23
Lowest price on 28/09/2022 was $6.45

The position has been closed out well below the stop loss despite the stock never trading below $6.45!

Wondering if someone has any idea why this might have happended?

Thanks

 
Hello.

I really like the fact that you joined as a new member, looked over the forum, read all the interesting stuff, and was able to write your query in less than 5 minutes! With a chart and a screen shot! That's pretty good going!

You really need to read up on what a CFD is. You are placing a bet with the CFD provider, you are not trading a stock on a stock exchange.

Did you check the CFD provider's bid and ask price at the time that your stop was hit?

If I were you, I would query your CFD provider directly. No one on this forum will be able to answer your question unless they have all the facts, including the prices that your CFD provider were quoting at the time.

KH
 
Hi Kevin,

Appreciate the response. I have queried CMC directly but they're not offering much help unfortunately, so thought the collective wisdom on here may be able to throw up some ideas. For an ASX200 listed stock, I'm a little lost for words for how there was such a bad spread on offer.
 


hello, welcome.

This is because you are trading CFDs, but I doubt it's because the CFD provider is doing something nefarious.

This is what I think happened:

* You entered the trade and put a stop at 6.28
* Your assumption is that the stop is triggered when a trade in the underlying market occurs at or below 6.28 during market open hours 10AM-4PM
* In reality, their stoploss logic for buys executes the stop when the bid on the spread of the CFD exceeds 6.28 at any time
* At some point, probably in pre or post market auction, the spread widened and they tried to dump their hedge of your position into the underlying market, when the book was thin and very wide.

The stoploss logic is optimised for 23/6 markets like forex.

CFD stoploss works on the spread not trades in the underlying, that is the price you pay for not trading in the underlying market (crossing the spread to trade in return for 0 commission).
 
I have always said
"Stop losses don't always work"
And
" They never work when you need them the most"

Sorry Captain Skate and other Back-testers
That is why I don't trust any back testing that has not been done manually

Sorry 'bout that
 
The chart you have shown is the 1 minute chart, but it's the closing chart, i.e. the last price traded each minute.

Take a look at the range chart, the opening range for some recent days has been huge, and this is just RTH (Regular Trading Hours). Who knows what's happening during ETH, especially considering this is a dual listed stock on the NZX.

I think having any expectation on reasonable execution for a particular price on a CFD stoploss in a stock like this is quite unrealistic.

 
Okay thanks for the details Investo Boy that has been very helpful. This was my first CFD trade on the ASX, previously US stocks only with no issues at all. The CFD trading has actually been mostly successful up until this trade, so felt like CMC was trying to offload me as a customer.
 
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