LONDON, May 3, 2012 /PRNewswire/ --
Seasoned traders will testify that no matter how carefully you analyse the markets or how brilliant your trading strategy, one simply cannot escape a loss-making trade for long.
As with all other opportunities, spread betting offers traders a chance to net a profit - or loss - from their trades. Unfortunately, there's no way of knowing beforehand which way the tide will turn.
It stands to reason then that traders should try to limit their risk exposure as much as possible and this is where risk management orders, provided by financial spread betting providers such as Finspreads, come into their own.
Stop losses provide shelter on a rainy day
Stop loss orders and guaranteed stop loss orders are a great way of stopping your losses from spiraling out of control.
These risk management orders can help traders to ensure that they never lose more than what they are prepared to let go of, without limiting their profit potential.
Stop loss orders
Stop loss orders, as the name suggests, help traders to manage downside risk and are used to close an open position when the market reaches a predetermined level. Stop loss orders can help you to limit the potential loss on a position by automatically closing a trade at a pre-determined level, once prices fall to that level. Once a stop loss order is triggered your trade will be closed at the next available price.
Guaranteed Stop Loss Order
A guaranteed stop loss order offers an additional level of certainty when managing your downside risk. With a guaranteed stop loss you pay a small additional premium on the trade to guarantee that the level at which your order will be executed is the exact level that you set, regardless of any gapping in the market.
Finspreads offers guaranteed stop losses that are especially useful in volatile markets when prices can move suddenly and significantly, and may not hit the exact level that at which you set your stop loss.
It is imperative to remember however, that spread betting is a leveraged product and can result in losses greater than your initial deposit.
Find out more about the benefits of spread betting with Finspreads.
Finspreads is a leading online financial spread betting firm, offering access to thousands of instruments on the world's financial markets.
The company pioneered fully interactive online spread betting in 1999 and continues to invest in technology to ensure that its service remains amongst the market leaders.