Curriculum·R404 Execution and Trade Craft·about 43 min
Stop placement
By the end of this lesson you can
- →State what a stop order actually is, and what it does not promise
- →Place a stop at invalidation and check it against the market's ordinary range
- →Compute the gap between an intended loss and a realized one when a market gaps
- →Decide when a guaranteed stop, a smaller size or an option is the correct instrument
Senior · enrolled learners
This lesson opens with The Swiss National Bank floor removal, 15 January 2015.
- What happened
- The Swiss National Bank had held a floor of 1.20 Swiss francs per euro since September 2011 and had repeatedly reaffirmed it. On 15 January 2015 it abandoned the floor without warning while cutting rates further. Within about a minute EUR/CHF traded at 1.10, then 1.00, then 0.95 and briefly around 0.85, a fall near 29 percent, on electronic books that had been conditioned by forty-one months of one-way risk. Stop-loss orders did not execute at their levels because there was nothing at those levels to trade against, and most filled hundreds of pips lower. Retail clients across multiple brokers ended with balances below zero. Alpari UK entered insolvency the following day. FXCM received $300M of financing from Leucadia in exchange for $250M of two-year senior secured notes at a 10 percent coupon.
- The decision point
- The stops were correctly placed, correctly sized and correctly resting at the venue. They were orders to trade at market once triggered, and there was no market. A stop promises that you will attempt to leave at a price, not that you will leave at it, and the difference between the two is the entire content of this lesson. The clients who ended below zero had done the arithmetic on the intended loss.
What you will be able to answer
- →What is a stop order?
- →Where does a stop belong?
- →What did the gap cost?
- →What are the three answers to gap risk?
Orientation and Year One are open: anyone can read them without an account. From Year Two onward the lessons are for enrolled learners, because progress through the later years only means anything if it is tracked against a record.
It is free. We do not sell the list and there is nothing to buy at the end of it.
Sources and review
- https://www.cnbc.com/2015/01/16/snb-victim-forex-broker-enters-insolvency.html
- https://www.swissinfo.ch/eng/fxcm-faces-losses-as-swiss-shock-leaves-alpari-uk-insolvent/41219974
- https://www.forbes.com/sites/deanpopplewell/2015/01/15/flash-crash-ensues-after-swiss-drop-euro-cap/
- https://www.markethistories.com/en/the-swiss-franc-shock-when-the-snb-abandoned-its-euro-floor-2015
Confidence high·Volatility low·Reviewed 2026-08-07·Owner unassigned
Contested
Intraday lows for EUR/CHF on 15 January 2015 differ substantially by venue and by feed, with prints reported between about 0.85 and 1.00 within the same minute. The lesson uses 0.85 as the widely reported intraday extreme and 1.00 as the illustrative fill level, and states both as inputs to the arithmetic rather than as the experience of any particular account.
Negative balance protection has since become mandatory for retail clients in several jurisdictions, which changes who bears the gap but not whether the gap occurs. Check the rule that applies to you rather than assuming either outcome.
S203-10 owns volatility and volume tools including range measures. This lesson uses them as an input to placement rather than re-deriving them. R402-02 owns the liquidation price, which per part four must always sit beyond the stop. Keep both splits.