The CleanFinancial.com guide to Guaranteed Stops.
- Quick Example of a Guaranteed Stop
- The Extra Cost of Guaranteed Stops
- Guaranteed Stop Loss
- Companies That Offer Guaranteed Stops Orders
- Guaranteed Stops FAQs
Financial Spreads are now offering Guaranteed Stop Loss orders on their platform.
Until now, clients had been able to speculate on the markets knowing that their trade was protected by a stop loss. A stop loss order will still be available, and is still automatically added to all spreads bets and CFDs with the company.
For added security, and like IG, CMC & ETX Capital, the spread betting company are also offering Guaranteed Stop Losses.
Quick Example of a Guaranteed StopAs mentioned, the firm already provide stop losses, nevertheless normal stop losses don’t guarantee the point where your trade will be closed if the marketplace gaps.
For instance, let’s say that you purchase the FTSE at 6000, and you set your stop loss at 5980. If the UK index were to ‘gap‘ and drop to 5970, then your trade would be closed at 5970, instead of at 5980.
This is simply because the index didn’t trade at 5980, and as a result the firm didn’t offer that prices level. The next price that was offered was 5970, and as a result your trade would be closed there instead.
Let’s take the exact same example but rather than filing a normal stop loss order at 5980, you file a guaranteed stop loss order at the exact same level. If the market gapped again and dropped to 5970, your trade would be closed at 5980, as your stop loss was guaranteed.
The Extra Cost of Guaranteed StopsNote that as Guaranteed Stops are a form of insurance against market gaps they come with a small additional price.
Firstly, there’s a minor premium to pay for choosing a Stop to be guaranteed.
Secondly the Guaranteed Stop needs to be placed further away from your entry level than if it was a non-guaranteed Stop.
Guaranteed Stop LossAdam Jepsen, spokesperson for Financial Spreads, says that the new function will permit clients to trade with greater confidence. “We’ve been working hard and have a major new addition on our spread betting platform: guaranteed stop orders,” he said.
“We take our customer feedback seriously and are extremely pleased to announce we are rolling these [guaranteed stop orders] out because of client demand.
“Guaranteed stop orders allow you to trade with complete confidence that you’ll be protected against any market slippage or gaps by being filled at the level you’ve specified.”
Guaranteed Stops FAQsFor more on Guaranteed including costs and when they are particularly useful, see FAQs on Risk Management and Guaranteed Stop orders.
Companies That Offer Guaranteed Stops OrdersThe following spread betting companies firms let you apply Guaranteed Stops to most trades:
Spread betting and CFD trading carry a high level of risk to your capital and you may lose more than your initial investment. Spread betting and CFD trading may not be suitable for all investors. Only speculate with money that you can afford to lose. Please ensure you fully understand the risks involved and seek independent financial advice where necessary.