In our experience, most traders will, at some point in their trading career, make at least one losing trade. Even the best traders don’t always make a profit. But, there are things you can do to try to ensure your profitable trades outnumber your losses.
Remember, as spread betting is a leveraged product, you’re controlling a much larger position than your deposit would normally allow you to trade in the underlying market. The advantage of this is that your winning trades can return much greater profits. However, you also run the risk of your losses being magnified in exactly the same way. Risk management should play a crucial role in your trading strategy.
At City Index, we offer a range of tools to help you manage your trading risks. These include, stop loss orders and guaranteed stop loss orders. You can read more about these below.
We offer a range of free trading webinars and interactive seminars to help enhance your knowledge of spread betting and make you a more confident trader.
We also provide a real-time economic calendar that covers major market-affecting events in the UK, EU and US, which will help you plan your trades.
By using the right risk management tools, you can limit your potential losses without capping your profit potential.
Stop loss orders can be used to close a losing trade once a market passes a specific trigger value that has been set by you. This means you’re able to automatically close trades and cut your losses if the market moves against you.
SLOs are not infallible, though, because the order will close your trade at the best available price once your pre-set stop value has been triggered. This means that during times of market volatility, your trade could sometimes be closed out at a level that is different to your trigger value. This is known as ‘market gapping’. If the market does gap, your closing price might differ from the trigger value you set.
At City Index, we offer standard stop loss orders freely across all markets on your trading account.
The market information tab located on the top-right corner of your trading platform window contains more information.
Guaranteed stop loss orders are the most efficient risk-management tools available. They work in the same way as standard stop loss orders, except they guarantee to close your trade at the trigger value you set, regardless of underlying market volatility and gapping. For this added peace of mind, guaranteed stop loss orders do incur a small premium (debited from your cash balance), on confirmation of the order and minimum distances apply.
For example purposes, let's say you've bought £2 per point of the Wall Street Index at 10100, and have highlighted 9950 as your maximum loss level, a £300 loss allowance (10100-9950 x £2). You can use a guaranteed stop loss order to ensure that should the Wall Street Index reach 9950, our systems automatically close out your trade at this level: to prevent you from incurring any further losses.
Unfortunately, some bad company earnings pushed the Wall Street Index lower to 9900 and our systems automatically close your position out at 9950. Even though the index continued to trade past your maximum risk allowance, the guaranteed stop loss has already stopped your losses by automatically closing out your trade.
Please note that guaranteed stop loss orders are not available across all our markets. Please see the market information sheets located in our range of markets section for more information.
To limit your trading risk, we recommend that you consider a guaranteed stop loss when you open a new position. This will help protect you if the price moves against you.
Spread betting, CFDs and Forex trading are leveraged products which can result in losses greater than your initial deposit. Ensure you fully understand the risks.
*Spread betting and CFD trading are exempt from UK stamp duty. Spread betting is also exempt from UK Capital Gains Tax. However, tax laws are subject to change and depend on individual circumstances. Please seek independent advice if necessary.
+Margin Factor is shown here as a guide only. For the current margin factor applicable to your position please refer to the Market Information on our Trading Platform.
†1 point spreads available on the FTSE 100, Wall Street, Germany 30, France 40 and Australia 200 during market hours on daily funded trades & daily future spread bets and CFDs (excluding futures).
Head and Registered Office: Park House, 16 Finsbury Circus, London, EC2M 7EB. City Index Limited is a company registered in England and Wales, number: 1761813. Authorised and Regulated by the Financial Conduct Authority. FCA Register Number: 113942. VAT number: 524837435.
City Index and City Trading are trademarks of City Index Limited.
Apple, the Apple logo, iPod, iPod touch, and iTunes are trademarks of Apple Inc., registered in the U.S. and other countries. iPhone is a trademark of Apple Inc. App Store is a service mark of Apple Inc.
The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.