I experienced a similar incident with Bitcoin (BTC) yesterday (27/07/2020) between 18:05 and 18:10. It opened at $10,868.51 and closed at $10,729.93 with a high of $10,886.33. However, in the middle of this 5 minute period the price dropped sharply to $10,485.84; that’s a range of $400.49 in just 5 minutes. I had set a trailing stop distance of 300, so this sudden drop caused my position to close at £10,557.94.
I’d opened two new positions at prices of $10,868.75 and $10,858.38 at 18:01 and 18:05 respectively. I was closely watching the BTC price at 18:07 when my position was closed but I don’t remember seeing this dip. I immediately tried to buy back in, but the price was already back above $10,700. Fortunately, my position was profitable, but I still missed out on a lot of gains as the price has subsequently been as high as $11,181.60.
I’ve checked Bitstamp and confirmed that it also shows the dip.
Can somebody explain the circumstances that cause these sudden price changes? With BTC rising dramatically recently and the sellers/buyers ratio being around 10/90, I don’t understand how such a dramatic downward move can happen.
I’ve only started trading using the CFD platform recently, so I’m trying to develop an understanding of how to set my Take Profit, Stop Loss and Trailing Stop associated orders.