Risk Management

That’s why your Spread Co trading account includes useful features that help you manage risk by limiting potential losses or locking in any gains. There’s no charge for stop loss and limit orders, so you can use them on every position you take.
  
Here’s how they work.

Managing CFD risk

We want you to make the most of the opportunities that trading CFDs with Spread Co offers, but we also want you to be comfortable with the amount of risk you take. Our risk management features let you take more control by placing an upper limit on your potential loss. They can also let you automatically lock in your gains at a level chosen by you. They’re completely free, so they’re easy to use whenever you open a position.

 

Stop loss

With a stop loss, you set a price or value at which your trade will automatically close. This gives you some protection and helps you to limit your losses if the markets move against you. For example, if you decide to go long on a share valued at £1 today, you could set a stop loss at £0.98. Your position would automatically close if the share price fell to, or below, this value.

Be aware, stop loss values aren’t guaranteed. If markets are falling (or rising) sharply you might not be able to achieve the stop loss price when your trade is closed. Your position will be closed at the first available price below your stop loss.

You can apply a stop loss to all trades with Spread Co.

 

Stop loss example

Guaranteed stop order

Guaranteed stop orders are available when you open a position on some markets. They work in the same way as stop loss but they guarantee that the stop loss price will be achieved, even in volatile market conditions. Unlike a stop loss, there is a small charge for a guaranteed stop order.

 

Limit order

With a limit order you set a price or value at which you want to take profits. This gives you a guarantee that your trade will be executed at a specific price, or better. Limit orders are good for ‘locking-in’ profits, and where you’re not able to keep a close eye on market movements.

 

Limit order example

Using stop loss and limit order together

A great way to use these risk management features is to use them together, that way you automatically lock in gains if the market moves in your favour, and set a limit on your losses if it moves against you. This is a great feature if you can't always keep an eye on your open positions, or if you have a strict trading style.
    
You can adjust your stop loss and limit order levels at any time, while your positions are still open.

 

Stop and limit example

Other risk management techniques

In addition to these features, we also offer a number of other risk management tools you can apply to your account and your trades. These include:

• One-Cancels- Other orders - when you place two simultaneous orders, one of them will be cancelled if the other is triggered
• Contingent order - lets you automatically attach a stop loss and/or a limit order if the primary order is triggered

You can also stipulate the time frame for your orders. They can be:

• Good for the Day (GFD) - where your order is automatically closed at the close of market on that day
• Good until Cancelled (GTC) - where your position remains open until you give a specific instruction to close it
• Good ‘til Time (GTT) - where your order will automatically close at a specific time on a specified day

Try CFD trading with no risk

You can open a Spread Co demo account and try CFD trading in a live market environment. There’s no cost involved and absolutely no risk.