Stop loss order

You don't have to set up limits and stops with every trade you do. However, as a beginner, we recommend you use them.

Stop loss orders can be used to limit your trading risk and are an essential part of disciplined trading. Using stops means you are automatically taken out of a position if the market moves against you, which limits your loss.

Stop losses can also be used to lock in profit. If the market moves in your favour, you can move your stop order with the prevailing price, which locks in profit if the market suddenly moves against you.

Example of a stop loss order

You have placed a bet (buy) at £10 per point on XYZ at an opening price of 150p. You believe that XYZ price will strengthen. However, you want to limit any potential loss and place a stop order to sell £10 per point at 130p. This limits your loss should XYZ fall to 130p or below.