medium · Market Microstructure
A trader places a Stop-Loss Sell order for 1,000 shares with a stop price of 70.00. Overnight, bad news causes the stock to gap down and open at 65.00.
What happens to the order at the open?
- The order triggers and becomes a market order, executing at the best available bid near 65.00.
- The order becomes a limit order at 70.00 and remains unfilled until the price recovers.
- The order executes exactly at 70.00 because that was the specified stop price.
- The order is cancelled because the price skipped the stop price entirely.
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