OPENING GAP
While discussing the different types of orders, it is worth to mention how they are executed in the event of a market opening with a gap (the opening price of the market in a given session differs from the closing price of the previous session).
In such a situation, both Limit and Stop orders will be executed at the first available price that occurs in the market, meeting the conditions for activation of the order. The individual types of orders will be discussed using the following examples:
BUY ORDERS:
DE30 ended the trading session at BID/ASK 12500.0/12501.0
Buy Limit order for 10 lots, set at 12450.0
SCENARIO 1:
DE30 starts the new trading session at BID/ASK 12400.0/12401.0 with available liquidity as in the example below.
A Buy Limit order is executed in full at the volume weighted average price of 12401.3 (ASK)
SCENARIO 2:
DE30 starts new trading session at BID/ASK 12400.0/12401.0 with available liquidity of 5 lots::
The next price (new tick) is BID/ASK 12401.0/12402.0 with available liquidity of 10 lots:
A Buy Limit order is executed in full, yet in two parts: 5 lots at 12401.0 (ASK), and 5 lots at 12402.0 (ASK)
SCENARIO 3:
DE30 starts the new trading session at BID/ASK 12449.0/12450.0 with available liquidity of 5 lots:
The next price (new tick) is BID/ASK 12451.00/12452.00 with available liquidity of 10 lots:
A Buy Limit order is partially executed: 5 lots at 12450.0 (ASK). The remaining 5 lots will be executed when the price reaches again the ASK level of 12450.0 or lower. The unexecuted part remains as an active pending order.
Buy Stop order for 10 lots, set at 12550.00
SCENARIO 1:
DE30 starts the new trading session at BID/ASK 12600.0/12601.0 with available liquidity as in the following example
The Buy Stop order is executed in full at the volume weighted average price of 12601.2 (ASK)
SCENARIO 2:
DE30 starts new trading session at BID/ASK 12600.0/12601.0 with available liquidity of 5 lots :
The next price (new tick) is BID/ASK 12601.0/12602.0 with available liquidity of 10 lots:
The Buy Stop order executes in full, but only at 12602.0, because the liquidity available at the previous tick was insufficient for execution.
SCENARIO 3:
DE30 starts the new trading session at BID/ASK 12550.0/12551.0 with available liquidity of 5 lots:
The next price (new tick) is BID/ASK 12548.0/12549.0 with available liquidity of 10 lots:
There is insufficient liquidity available at the price meeting the activation condition. The order is not executed, but remains active as a pending order and will be executed when there is a new price that meets the activation condition with sufficient liquidity.