Despite the risk that comes with the use of high leverage, spread betting offers effective tools to limit losses.
- Standard Stop Loss Orders - Stop losses orders allow reducing risk by automatically closing out a losing trade once a market passes a set price level. In the case of a standard stop loss, the order will close out your trade at the best available price once the set stop value has been reached. It's possible that your trade can be closed out at a worse level than that of the stop trigger, especially when the market is in a state of high volatility.
- Guaranteed Stop Loss Orders - This form of stop loss order guarantees to close your trade at the exact value you have set, regardless of the underlying market conditions. However, this form of downside insurance is not free. Guaranteed stop loss orders typically incur an additional charge from your broker.
The Bottom Line
Continually developing in sophistication with the advent of electronic markets, spread betting has successfully lowered the barriers to entry and created a vast and varied alternative marketplace.
Continually developing in sophistication with the advent of electronic markets, spread betting has successfully lowered the barriers to entry and created a vast and varied alternative marketplace.
The temptation and perils of being
over leveraged continue to be a major pitfall. However, the low capital outlay
necessary, risk management tools available and tax benefits
make spread betting a compelling opportunity for speculators.
