Excerpt from: Understanding Spread Betting
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| June 12, 2007 | | Limiting your losses when placing spread bets | Spread betting requires risk. Because you are placing wagers on the performances of financial instruments, you are at some point going to wager wrong and lose some money. This is why it is important in spread betting to remember to place a stop loss order.
A stop loss order is one in which you ask the indexation company to exit your position when a certain level is reached. This way, rather than continuing to lose money as the instrument moves against you, you cut your losses.
It is important, however, to note that the indexation company may not be able to fulfill your stop loss order exactly. If the market is moving quickly, it may not comes right when you want it. But the indexation company usually tries to get it as close to your requested level as possible.
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