00:00Yes, stop losses fail regularly, and the failure isn't hypothetical.
00:04It's a structural feature of how markets execute orders, not a bug.
00:09A stop loss is a trigger that becomes a market order once price hits your level.
00:13It does not guarantee the fill price, only the fill itself.
00:171. Slippage in fast markets
00:19During flash crashes or gap opens, e.g., the May 2010 flash crash, or overnight gaps after earnings,
00:27price can jump past your stop level entirely, filling you 2-10% worse than intended,
00:33especially in low-liquidity names.
00:352. Stop-hunting-slash-liquidity graphs
00:38In forex and crypto especially, price often wicks just below obvious support levels
00:43where retail stops cluster, triggers them, then reverses.
00:47This is common enough that stop-hunting is a recognized pattern in liquid, algorithmically-traded markets.
00:543. Broker-slash-exchange outages
00:57During extreme volatility, crypto exchanges in 2021-2022 saw repeated outages during major sell-offs.
01:05The platform itself can fail to execute, leaving positions unprotected for minutes to hours.
01:114. Weekend-slash-after-hours gaps
01:14Stocks and even some crypto pairs can gap past stops when markets reopen after news breaks while closed.
01:20This changes by context. For large-cap, high-liquidity stocks during normal trading hours,
01:26stop failures are rare, and slippage is usually under 0.1% to 0.5%.
01:31For small caps, crypto, or forex during low-liquidity sessions,
01:37Asian session for majors, or any altcoin, failure risk is materially higher.
01:42Retail traders on unregulated or thinly-capitalized exchanges
01:46face more platform risk than those on major regulated venues.
01:49I don't have current 2025-2026 statistics on stop-loss failure rates by asset class,
01:56so treat specific percentages as illustrative, not precise.
02:00Practical takeaway
02:01Don't treat a stop-loss as a guarantee.
02:04Size positions assuming worst-case slippage.
02:07Avoid relying solely on stops through known high-volatility events.
02:11Earnings, major news, and for large or leveraged positions,
02:14consider guaranteed stops, where offered, usually for a fee, or reduced size instead of assuming protection.
02:22Finally, remember that everything we discussed today is for educational purposes only
02:27and does not constitute financial advice.
02:29Good luck to everyone, and see you in the next video.
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