Price Gaps Beyond Limit Order, What Happens?
QUESTION:
What Happens if the Price Opens Beyond My Limit Order When a New Week Begins?
ANSWER:
That’s a good question, and the answer applies to any time the price gaps beyond a limit order. In Forex, this is most likely to happen when the market gaps open at the start of a new week, or at least happen most dramatically on those occasions.
A limit order is an order to buy or sell at a better price than the current market price. This means that a buy limit order would be at a lower price than the current price. A sell limit order would be at a higher price than the current market price.
If the price opens or suddenly jumps to a level beyond a limit order, the limit order should be filled at the better price, and not the price that the order was originally set for.
Of course, if the gap happens during the normal course of trading, instead of at a weekly open, most brokers will take the opportunity to fill your order at the original price. They may not be so quick to fill your stop orders in similarly fast-moving markets!
