When you trade CFDs you are trading the markets using a leveraged financial product and while this means that you can open a large position with a relatively small initial investment, it also comes with a degree of risk. Should the market move against you your losses will also be magnified.
When you trade CFDs at ETX we provide a range of risk management tools to help you lock in a level of risk you are comfortable with and which allows you to protect yourself against excessive market volatility.
Always ensure that you fully understand the risks involved when trading CFDs and never overleverage your account. Our guide below takes you through some of the powerful tools you can use to help lock in profits and minimise your losses when trading CFDs.
What risk management tools can I use when trading CFDs?
Stop Loss Orders
A Stop Loss Order allows you to choose the exact amount in points or P&L that you are comfortable risking on your CFD trade.
You can add a Stop Loss and define your chosen amount when you first open your trade by selecting the option in the trade ticket. We will then close out your trade when the market price moves through your chosen limit.
A standard stop loss will protect you against any losses that would have incurred past your predetermined price point, however they do not protect against excessive market volatility or market gapping.
Guaranteed Stop Loss Order*
For the strongest possible risk protection, a Guaranteed Stop Loss is the best choice. Guaranteed Stops work in a similar way to standard Stop Loss Orders, however they will close your position automatically at the price you have chosen, regardless of market gapping or volatility. You will always be closed out at the exact price you specify.
Guaranteed Stops give traders extra peace of mind and an added layer of protection against rapid market movement. They are particularly good if you are looking to trade volatile markets such as Cryptocurrencies, Commodities or Forex, or if you’re trading in times of increased volatility. By using Guaranteed Stops, you can fix your risk level at a precise point that suits your trading strategy. We offer free Guaranteed Stops* without charge on a number of our most popular CFD markets such as:
- Germany 30
- Wall Street
- UK 100
- SP 500
- US Tech 100
- Brent Crude
Trailing Stops are a powerful tool that allow you to “track” market movement by a setting price point above or below market value at which you’d like your position to be closed out.
Your Trailing stop will then move with the prevailing market trend, allowing you to lock in profits as well as minimise losses should the market move against you.
* Free Guaranteed Stops are only free at certain times, on some markets for retail clients only - click here for more information.