Spread Betting and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 71.8% of retail investor accounts lose money when trading Spread Betting and CFDs with this provider. You should consider whether you understand how Spread Betting and CFDs work and whether you can afford to take the high risk of losing your money
Forex Risk Management
Whenever you invest there will be some risk. We help you manage it when you trade forex with Spread Co.
When you trade forex you’re trading on margin. So you’re using leverage to gain exposure to a potentially higher profit. However, it is important to note that using leverage also means losses are amplified too. We call this an investment risk.
To help you manage this risk, there are useful risk management features included in your Spread Co account.
Some of them are free to use so it’s worthwhile using them with every position you take. Here’s how they work.
Managing forex trading risk
Whether you trade forex using Spread Betting or by trading CFDs you can add in risk management features that allow you to limit your potential loss, and to lock-in your profit when it reaches a particular level.
There’s no charge for using risk management features like these. Using them when you open a new position — (or even after the fact, on positions that are already open) — can help you better manage the level of risk you’re comfortable with being exposed to.
Using stop loss orders with forex trading
A stop loss is an order. If the market price meets this order a trade is automatically executed. So, if exchange rates move in the opposite of the direction you predicted, a stop loss will give you some protection and limit your losses.
You can apply a stop loss to all positions with Spread Co.
Let’s imagine you went long on GBP/USD at 1.45505.
If sterling (GBP) was to weaken against the US dollar (USD),you would stand to make a loss when you come to close your trade.
You can place a stop loss either when you first open the trade, or some time thereafter (if the trade is still live). This will automatically close your position at a price you have selected. For example, you might decide to set a stop loss at 1.45455 which means your potential loss would be 50 pips. So stop losses can help you set a pre-determined level at which you want your trade to be closed out if the market is moving against you.
Locking in your forex gains with limit orders
Forex trading works best when you’re able to react quickly to market developments. But sometimes you may not be able to keep a close eye on your open positions. That’s where a limit order can be very useful. Put simply, it lets you automatically close your forex positions if the market reaches a level set by you.
Using the previous example, let’s say you felt confident that GBP/USD will climb from 1.45505 to 1.45605.
If the value does rise the way you anticipated, your position would be automatically closed when it reaches this level.
Using stop loss and limit orders together
Using these features together can potentially help you better manage the financial risks associated with forex trading. You can also adjust your stop loss and limit order values to take account of changing market conditions without having to close your trades.
For example, say GBP/USD is trading at 1.45505, you set a stop loss at 1.45455.
If the value was to rise to 1.46000, you could increase your stop loss to 1.45505. So if the value falls again to 1.45505 or less your trade would close automatically.
In this case your only loss would be financing charges, assuming you held the position overnight and your stop loss achieved the value you set.
Other risk management techniques
At Spread Co we also offer a range of risk management tools which you can apply to your positions. These include:
One-Cancels-Other orders — when you place two simultaneous orders, one of them will be cancelled if the other is triggered
Contingent order — lets you automatically attach a stop loss and a limit order if the primary order is triggered
You can also stipulate the time frame for your orders. They can be:
Good for the Day (GFD) — where your order is automatically closed at the close of market on that day
Good until Cancelled (GTC) — where your position remains open until you give a specific instruction to close it
Good ‘til Time (GTT) — where your order will automatically close at a specific time on a specified day
Easy To Open An Account
Reliable Platform
With our platforms you can trade wherever you are – at home, in the office, or when you’re out and about.
0% financing on short index positions
Some companies will charge you to hold a short index position. At Spread Co we won’t.
Powerful Charting
Spread Co charts are powered by TradingView Inc.
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