Guaranteed Stop Loss (GSL)
A Guaranteed Stop Loss is a broker feature that ensures your stop loss is executed at exactly your specified price, regardless of gaps or slippage. It typically costs a small premium (e.g., 3 pips).
What GSL Protects Against
GSL protects against gaps - situations where price jumps over your stop level:
- Weekend gaps - Market closes Friday, opens Monday at a different price
- Daily close gaps - Some instruments have daily trading breaks
- Flash crashes - Rare events where price skips multiple levels instantly
What GSL Does NOT Protect Against
GSL does not protect against normal price movement:
- News volatility where price moves through your stop (no gap, just fast movement)
- Whipsaws that hit your stop then reverse
- Any situation where price actually touches your stop level
During a news event like an interest rate decision, price typically moves aggressively rather than gaps. Your stop will get hit at roughly your level anyway - you'd be paying the premium for nothing.
When to Use GSL
| Scenario | Gap Risk? | Use GSL? |
|---|---|---|
| Holding over weekend | Yes | Yes |
| Holding through daily market close | Yes (some instruments) | Yes |
| Flash crash protection | Yes | Yes |
| Trading through scheduled news | No (moves, doesn't gap) | No |
| Intraday trades on liquid pairs | No | No |
When NOT to Use GSL
- Trading through news events - Follow blackout rules instead, or accept the movement risk. Price moves, it doesn't gap.
- Intraday trades - If you're in and out within the session, gap risk is minimal.
- Wide stops on liquid pairs - If your stop is 100 pips and typical slippage is 2-3 pips, that's only 2-3% extra. Not worth the premium.
Cost-Benefit Rule of Thumb
Use GSL when:
- The premium is less than 10% of your risk, AND
- You are exposed to genuine gap risk (weekend hold, market close, etc.)
Adjusting Take Profit for GSL Premium
If you pay a GSL premium, your effective risk increases. To maintain your intended risk:reward ratio, adjust your take profit accordingly.
Example:
- Original risk: 30 pips
- GSL premium: 3 pips
- Total effective risk: 33 pips
For 1:1 R:R with GSL, set your take profit at 33 pips (not 30).
Summary
GSL is insurance against gaps, not against movement. Use it for weekend holds and market close situations, not for trading through news events.