Managing risk

Leveraged trades such as CFDs and spread bets carry the risk of large losses if the market moves against you. These potential losses can be limited by using the trading tools available through our platform, and we strongly recommend using these tools, especially in volatile markets.

Orders

An order is an instruction to automatically trade when a particular market price is reached. Orders can be set to open or close positions, at better or worse prices than the prevailing price.

Stop loss orders and guaranteed stop loss orders are used to limit downside risk on open positions:

Stop loss orders

Stop losses are used to reduce risk by closing a losing trade once a market passes a trigger value set by you. This means that you are able to automatically close trades and cut your losses if the market moves against you. Stop loss orders are not infallible though.

Because the order will close your trade at the best available price once it is activated, the stop loss is exposed to a gapping market. If the market does gap, your closing price could be significantly below the value set for order activation.

Guaranteed stop loss orders

If you are concerned that a market might gap, you can use a guaranteed stop loss order. For a small charge, a guaranteed stop loss will close out a trade at the exact price specified, eliminating any risk of losing out to a gapping market.