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 16100, and have highlighted 15950 as your maximum loss level, a £300 loss allowance.
You can use a guaranteed stop loss order to ensure that if the Wall Street Index reaches your specified level, our systems automatically close out your trade: to prevent you from incurring further losses.
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.
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*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.
†1 point spreads available on the UK 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).
**Fixed spreads are available on major FX pairs during London trading hours between 8.00am GMT and 6.30pm GMT.
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