Managing risk
Managing risk is a fundamental part of any trading strategy.
Potential losses can be limited by using the risk management tools
available on our trading
platform. We strongly recommend taking advantage of these,
particularly in volatile markets.
Orders
Orders are flexible tools with which you can open or close
trades. They are essentially instructions to trade that
can be valuable in managing risk. City Index offers a range of
orders to help you get into, and out of, positions at the price you
want.
Limit orders
A limit order is an instruction to buy or sell at a price better
than the current available price. Place a limit order and if the
market moves in the direction you expect, you can lock in
profits.
Stop orders
A stop order is the opposite of a limit order: it is designed to
limit losses on an open order by closing a losing trade at a worse
price than the original purchase price. A stop order can also be
used to open a trade at a lower price.
Stop In orders
Our clients can access a rarely offered limit order that allows
you to place orders to buy above or sell below the market. The
order is triggered when the stock moves through that pre-determined
point - similar to a conditional order in share trading.
Stop loss orders
Stop loss orders reduce risk and limit potential loss on open
positions. Placing a stop loss order before, after, or as you enter
a position, at a price worse than your original opening price,
automatically closes your position if the market moves through that
price - therefore limiting your potential loss. Your position is
closed at the best price available when the order is triggered, but
if the market gaps, the best available price could be less than the
price set in your stop loss order.
Guaranteed stop loss order (GSLO)
Like a stop loss, a GSLO automatically closes an open position
if the market moves through your trigger price. However the
guarantee means that even if the market gaps, your trade will close
at the exact price you specified in your order. Some conditions do
apply and there is a fee for this service. Please note that GSLOs
are not available on all markets.
One cancels the other order (OCO)
Limit loss and protect profits with an OCO. An
OCO is essentially two orders linked to each other. When one order
is activated, the other is automatically cancelled. This prevents
the unused order from opening a new position.