Limit Your Risk
The recent instability of world markets undoubtedly highlights the chance of healthy gains should you trade in the right direction.
For example, on 17 August our Daily FTSE 100 price rose more than 260 points in just one hour, while on the same day our Daily Wall Street rocketed 350 points in barely a minute. These rapid swings were provoked by the Federal Reserve's cut in the discount rate, itself a reaction to heavy falls in the market earlier in the week.
For the day trader such volatile trading patterns may represent a golden trading opportunity, but the potential to lose more than you anticipated is a major concern. That's where risk protection can help you to take a view without taking on an open-ended liability.
Spread betting with Guaranteed Stops
To protect yourself against such dramatic movements you may want to consider opening your position as a Controlled Risk bet. We have low-cost Guaranteed Stops available across our extensive range of markets. For example, our Daily FTSE carries just a 2-point premium to place a Guaranteed Stop, while for Daily Wall Street the premium is just 3 points.
The premium is added or subtracted from your opening level, depending on whether you are going long or short. Your position will then be closed automatically should the market breach the level of your Guaranteed Stop. So your maximum possible loss is fixed at the outset, with no limit to your potential profit.
To find out more about our Controlled Risk service please see Risk Management
The above comments do not constitute investment advice and IG Index accepts no responsibility for any use that may be made of them.