what is a guaranteed stop loss, when should i use it?

A guaranteed stop loss offers you protection against price gapping, which is a scenario where price jumps over your specified stop price without any trading taking place.

Ordinary stop losses are exposed to the risk of gapping, but guaranteed stops aren't, & that is why your broker will charge you a fee after executing your guaranteed stop.

Price gapping is not the fault of your broker; it is a common market phenomenon caused by the release of breaking news such as NFP, CPI, Interest Rate Decisions, Political Events, etc.

Imagine you set a stop loss at 1.0004 and price suddenly gaps to 1.0001, your broker will have to execute your stop loss at 1.0001 causing you to lose an extra 3 pips more than what you bargained for. Guaranteed stops work to protect you from this kind of price gapping.

I use guaranteed stops when i am trading high volumes/big lot sizes because even a 1 pip price gap can mean a significant loss when trading large volumes.

I never trade NFP, CPI without using a guaranteed stop, I mean the broker only charges me for it if the slippage does happen so why wont I use it? Its one tool that lots of traders ignore. I once traded cpi and my stop loss was not executed until i had lost over 35 pips and ever since that experience, I never traded news events without a guaranteed stop.

I use guaranteed stops when i am worried that price slippage may occur. My current broker (Trade Nation) allows me set guaranteed stops and its not even that expensive.

A Guaranteed Stop Loss (GSL) is a special type of stop-loss order offered by some brokers, especially in CFDs and forex. It guarantees that your position will be closed at the exact price you specify, no matter how fast or volatile the market moves—even through gaps or slippage.

When to Use a Guaranteed Stop Loss

High-Volatility Markets

During major news releases or thinly traded assets where price gaps are common.

When Risk Must Be Fixed

If you cannot afford to lose more than a certain amount, a GSL locks in your maximum loss.

Overnight or Weekend Positions

Protects against unexpected price jumps while you’re away from the market.

Emotional or Inexperienced Traders

Ensures that fear or hesitation doesn’t lead to bigger losses than planned.