CFD Risks: Gaps and Slippage
One piece of weekend news, and on Monday the price opens straight past your stop. CFD risk doesn't only come from leverage.
Risk warning: forex, CFDs, options, futures and crypto assets usually involve leverage or high volatility, and you can lose more than you put in. This lesson only teaches the concepts; all numbers are for illustration and are not investment advice.
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Text version · CFDs, lesson 9: “CFD Risks: Gaps and Slippage”
One piece of weekend news, and on Monday the price opens straight past your stop. CFD risk doesn't only come from leverage.
Gap: price never passed through your stop
News over a weekend or overnight can make the open gap. A regular stop-loss can only fill at the first price after the gap, and the difference is slippage.
Can reduce risk, but not remove it
A guaranteed stop fills at your set price but costs a fee; negative balance protection means you can lose at most your account. Lower leverage and a regulated provider matter just as much.
CFD risk checklist
How big is the position relative to your account? What's the worst loss on a gap? Can your stop slip? Does the provider offer negative balance protection? How much is overnight financing? Answer these before you open.
Key takeaways
- Gap: the price jumps, so a stop order fills at the first available price after the gap (slippage).
- A big position + a gap can make losses far bigger than expected, even more than your account balance (depending on whether the platform offers negative balance protection).
- A regulated platform, sensible position size, guaranteed stops and negative balance protection can control the risk, but not eliminate it.
Try it yourself
You can do these exercises in this lesson's interactive simulation:
- Click "Example: stop $95, opens at $90" and watch through Monday's open: where does the stop actually fill? How much slippage?
- Keep the gap the same and switch to "Guaranteed stop": what does the loss become? What's the extra part?
- Set leverage to 20×, the gap to $13, and turn off negative balance protection: what does the account become?
- Lower leverage back to 5× and repeat: same gap, how different is the result?
Quiz and explanations
- 1. Your stop is at $95 and the price gaps straight to $90 at Monday's open. Where does the stop fill?
- Answer: Around $90.The price never traded at $95, so it can only fill near the open.
- 2. Which of these reduces CFD risk?
- Answer: Sizing positions carefully and using guaranteed stops.A guaranteed stop fills at your set price regardless of gaps, and a smaller position feels a smaller impact from a gap.
- 3. What does negative balance protection do?
- Answer: Caps your loss at a zero account balance, so you never owe the platform.An extreme gap can push an account below zero; with negative balance protection, the platform resets the negative balance to zero.
Terms in this lesson
- equity (Equity): Account balance + current floating profit or loss.
- gap (Gap): When price jumps to a new level between sessions without trading at the prices in between.
- guaranteed stop (Guaranteed Stop): A stop-loss that fills at your set price even if the market gaps, usually for an extra fee.
- leverage (Leverage): Controlling a large position with a small amount of margin; 1:100 means $1 controls a $100 position.
- negative balance protection (Negative Balance Protection): A guarantee that the most you can lose is your account balance, so you never end up owing the broker.
- slippage (Slippage): The difference between the price you expected and your actual average fill, which happens when a large market order eats through several price levels.
- stop-loss (Stop Loss): Automatically closes a position when price moves against you to a preset level, capping your maximum loss.