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Black Swan Gap: Stop-Losses and Leverage

When the market keeps rising, it's tempting to keep buying more. But breaking news can make price gap at any moment: your stop-loss fills at the opening price, and the higher your leverage, the harder you get hit.

Goal

After a rally, sudden bad news makes the market gap down at the open. Control your position size and stop-loss, and survive.

  • No stop-out
  • Maximum drawdown no more than 12%
  • Complete at least one trade
Rules

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.

Black Swan Gap: Stop-Losses and Leverage · Trading practice · 72lab