What are the risks?

There are certain risks associated with dealing on the financial markets – learn how to manage them with our range of tools and resources.

CFDs and spread bets carry risk in the same way that any financial product carries risk – if the market moves against you, you lose money. However, the risks associated with CFDs and spread bets can be greater because they are leveraged products.

What is leverage?

Leverage enables you to gain a large exposure to a financial market while only tying up a relatively small amount of your capital. In this way, leverage magnifies the scope for both gains and losses.

Is leveraged dealing risky?

Even though you only put up a relatively small amount of capital to open a position, your profit or loss is based on the full value of the position.

Therefore, the amount you gain or lose could be relatively large compared to your initial outlay.

What can I do to control my exposure to risk?

Develop a trading plan, and stick to it

A trading plan can help you clearly define and achieve your overall financial trading goals.

Our trading skills section offers advice on how to define and adhere to a personal trading plan.

Start slowly, and build your skills and expertise

If you’re new to leveraged products, you can get used to how leverage works by dealing in small sizes while you develop your understanding.

New clients can deal at reduced minimum deal sizes for two weeks (CFDs and spread betting) and reduced commissions for six weeks (CFDs) with our introduction programme.

Understand the markets you want to deal on

Ensure you understand the factors that influence different markets so you can base your dealing strategies on the most relevant information.

Our trading skills section covers each market we offer in great depth, and our experts provide regular data and commentaries in news and analysis.

Monitor your open positions

Ideally you’d be able to constantly monitor your open positions and react to market movements. Practically, however, this is often difficult.

Our platform is available via our free app, so you can monitor trades on your mobile or tablet. You can also set up price alerts to notify you when specific prices are reached.

Use stops and limits to protect against sudden market movements and gaps

Sudden market movements can cost you if you aren’t able to react immediately, or if the market ‘gaps’, moving sharply up or down with no trading in between. Gaps can occur overnight when prices change while the market is closed, or during the day in response to an unusual event.

Our risk management tools can help to protect you from sudden market movements and gaps, and to lock in profits when the market moves in your favour.

These include stop losses, guaranteed stops, trailing stops and limit orders.

Keep learning

Improve your success rate by learning more about the markets you’re dealing on and exploring new dealing strategies.

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