Risk Management Orders

  • Risk management plays an important part in trading success and is fundamental to any strategy. Limit potential losses with the use of the risk management tools available on our trading platform. We strongly recommend taking advantage of these, particularly in volatile markets. 

    Order Types:

    An order is an instruction to execute a trade when the price of a market reaches a trigger value set by you. Orders can support a range of trading strategies. 
     
    Limit Order: An order to automatically open a trade at a better price than the current 'Our Price' of a market, providing the price of the market reaches the specified order level. 

    Buying Long: You could use a Limit Buy Order to create a new open position at a price which is lower than the price quoted at the time. 
    Selling Short: You could use a Limit Sell Order to create a new open position at a price which is higher than the price quoted at the time  

    Stop Order: An order to automatically open a trade at a worse price than the current 'Our Price' of a market, providing the price of the market reaches the specified order level.

    Buying Long: You could use a Stop Buy Order to create a new open position at a price which is higher than the price quoted at the time.
    Selling Short: You could use a Stop Sell Order to create a new open position at a price which is lower than the price quoted at the time.
     

    One Cancels the Other (OCO): An order allowing you to take multiple views on the same market by placing two simultaneous opening orders. When 'Our Price' triggers one order, that order will be executed and the remaining order will be cancelled.   

    Closing Orders

    Limit Order: An order to automatically close a trade at a better price than the current 'Our Price' of a market, locking in profit.

    Long Stock ‘A’ at 321: If you want to take profits at 360, you can set a Closing Limit Order to sell at 360.
    Short Stock ‘A’ at 359: If you want to take profits at 320, you can set a Closing Limit Order to buy at 320. 

    Stop Loss Order: A Stop Loss Order can be attached to an open trade to automatically close the position at a worse price for a loss. It is therefore a key tool to help minimise your losses in the event that a price moves against you.

    Long Index ‘A’ at 4250 If you want to take losses at 3750, you can set a Closing Stop Loss to sell at 3750.
    Short Index ‘A’ at 4000 If you want to take losses at 4500, you can set a Closing Stop Loss to buy at 4500.

    If Done/Contingent Order: These closing orders are attached to opening orders. They are activated once the opening order has been executed into a live trade 

    Market Gapping and Slippage

    Market Gapping occurs when prices literally gap between one price and the next, without trading at the prices in between.

    A standard Stop Loss Order does not fully protect your trading risk. As outlined earlier, a Stop Loss Order is set at a specified price which, when reached, automatically triggers an Order to close your position. The closing trade is executed at the next available price immediately after the Order is triggered. This can be at the same, a better or a worse price than the specified execution level. In cases of severe gapping, the execution price may be at a substantially worse price than your Order price.

    Guaranteed Stop Loss Orders (GSLO): A Guaranteed Stop Loss Order ensures that the level at which an order is executed is the exact level that's been specified by the trader, regardless of any gapping in the market.

    Example: Say you are Long Stock ‘A’ at $15 with a Guaranteed Stop Loss Order placed at $13. Stock ‘A’ closes at $13.50 on Tuesday.

    On Wednesday, the company announces disastrous results before the market opens. This means that when trading hours begin, Stock ‘A’ prices open at $12.50, much lower than the previous close. 

    If you had placed a standard Stop Loss Order, the trade would have been automatically closed at $12.50. However, as the Stop Loss was guaranteed, the trade is automatically closed at the specified $13.

    Guaranteed Stop Loss Order fundamentals:  

    GSLO Premium – upon confirmation of the order an additional charge is payable.
    Amendments – a GSLO can be amended during trading hours without additional.
    Minimum Distance – Order levels must be placed a minimum distance above and below the current 'Our Price'.
    Availability – GSLOs are not available on all our markets - please refer to our Market Information Sheets.


    It is advisable to use risk management orders especially when: 

    Trading in volatile markets
    You don’t want to risk more than your initial deposit
    The market is prone to gapping
     

    How long are orders valid for?

    You can choose how long you would like to maintain your order by selecting the relevant ‘Good Until’setting. 

    Good Until Settings:  


    Good for the Day (GFD):
    Effective only on the day on which the order is placed. If the market trades during fixed trading hours (not 24 hours), then it will expire at the end of the day’s trading hours. If the market is 24 hours, the order will expire at midnight.

    Good till Time (GTT): Applicable and effective from the day it is placed until a date and time specified by you.

    Good till Cancelled (GTC): Applicable and effective from the day it is placed until you cancel it.

    Please remember that if you leave unlinked orders to close a position, and if you close your position prior to the orders being triggered, then these orders will not automatically be cancelled and may end up opening a new position. 

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