What is a GAP?
«A price gap» - is any situation from the following two:
1. Bid of the current quote is more than Ask of the previous quote;
2. Ask of the current quote is less than Bid of the previous quote.
When an order falls into the price gap orders of all types are executed in accordance with clauses: 5.27, 5.28, 5.29, 5.30, 5.31, 5.32 of the Terms of Business.
Gaps may be of two types:
1. When a price gap can be seen on the 1min time-frame.
Example:
The last quote before the gap is 1.4300, the next one – 1.4331. In this situation «Buy Stop», placed at 1.4305, falls into the gap.
For EUR/USD «Gap level» is equal to 0.0015 (15 pips).
The distance between the order level and the level of the first quote after the gap exceeds the value of the «Gap level» (1.4331 - 1.4305 = 0.0026, 26>15), that is why in accordance with clause 5.29 of the Terms of Business «Buy Stop» order is executed at the first quote after the price gap, 1.4333 (pending orders «Buy Limit» and «Buy Stop» are executed at Ask price).
2. When a price gap can not be seen on the 1min time-frame.
Example:
As we can see «Sell Stop» order was placed at 1.3625.
The last quote before the gap is 1.3628, the next one is 1.3606.
On the 1 min chart a white candle appears, price gap is inside the candle and we can not see it. The price gap will be seen once the tick history archive is analized. Tick history is sent to the e-mail on the Customer's request once a complaint has been lodged according to clause 8.2 of the Terms of Business.
The distance between the order level and the level of the first quote after the gap exceeds the «Gap level» (1.3625 - 1.3606 = 0.0019, 19>15), that is why in accordance with clause 5.29 of the Terms of Business «Sell Stop» is executed at the first quote after the gap at 1.3606 (pending orders «Sell Limit» and «Sell Stop» are executed at Bid).
«Gap level» - is the distance inside the price gap in pips. When the gap level is overcome orders of every type are executed at the first quote after the price gap, rather than at the order price. «Gap level» for every instrument is given in the Contract Specification at Alpari's web-site.
5.27. Under Normal Market Conditions the Dealer executes an Order at the Order Level.
5.28. When the Order Level falls within the Price Gap on the Market Opening, the Order is executed at the Bid or Ask price (depending on the order type) of the first obtainable after the Gap Quote. Buy Stop, Sell Stop or Stop Loss orders are executed at the level less profitable for the Customer; Buy Limit, Sell Limit or Take Profit orders are executed at the level more profitable for the Customer.
5.29. If under Abnormal Market Conditions the Order level falls within the Price Gap, the Order is executed by the Dealer:
a. at the Bid or Ask price (depending on the Order type) of the first obtainable after the Gap Quote, if the difference in pips/points between the Order level and the Bid or Ask price (depending on the Order type) of the first obtainable after the Gap Quote is higher than the "Gap Level" parameter, indicated in the Contract Specifications for each Instrument; otherwise
b. at the Order level.
5.30. When the Pending Order Level falls within the Price Gap on the Market Opening, it is executed at the first obtainable after the Gap Bid or Ask Quote if the difference in pips/points between the level of the Pending Order and the Bid or Ask price (depending on the Order type) of the first obtainable after the Gap Quote is higher than the "Gap Level" parameter, indicated in the Contract Specifications for this Instrument;
a. Buy Stop, Buy Limit Orders are executed at the Ask price of the first Quote, If-Done Orders are executed at the Bid price;
b. Sell Stop, Sell Limit Orders are executed at the Bid price of the first Quote, If-Done Orders are executed at the Ask price.
5.31. When If-Done Orders and the Pending Order they are related to fall within the Price Gap in the Quotes Flow, the Pending and If-Done Orders are executed:
a. at the Bid or Ask price (depending on the Order type) of the first obtainable after the Gap Quote, if the difference in pips/points between the level of the Pending Order and the Bid or Ask price (depending on the Order type) of the first obtainable after the Gap Quote is higher than the "Gap Level" parameter, indicated in the Contract Specifications for this Instrument; otherwise
b. at the Order level.
5.32. When several Orders are in the Price Gap, they are placed in the queue in order to be executed in ascending order of their Tickers. The Instruction, which is received earlier than the others in the queue, is sent to an unoccupied dealer for execution.
«Normal Market Conditions»
- shall mean the market where:
a. there are no considerable breaks in the Quotes Flow in the Trading Platform; and
b. there is no fast price movement; and
c. there is no large Price Gap.
