Managing your risk

CFDs come with a unique set of risks. You can take control of these using our risk management tools, and ensure you’re well-informed with our range of educational resources.

What are the risks?

The risk Why it happens Ways we help
Losing more than the money in your account. CFDs are leveraged meaning you only need to put up a fraction of your trade’s value to open it. So you could lose – or gain – much more than your initial deposit. You can mitigate risk and lock in profits by setting an automatic stop or limit, to define the level you'd like your trade closed at.

 

Find out more about stops and limits

Having your positions closed unexpectedly, resulting in you losing money. You need a certain amount of money in your account to keep your trades open. This is called margin, and if your account balance doesn’t cover our margin requirements we may close your positions for you. Keep an eye on your always-visible running balances in our platform or app, and add more funds if they’re needed.

 

Find out more about balance snapshots

Sudden or larger-than-expected losses (or gains). Markets can be volatile, moving very quickly and unexpectedly in reaction to announcements, events or trader behaviour. As well as setting stops, you can also be notified of significant movement by setting a price or distance alert, giving you the choice of whether or not to react.

 

Find out more about alerts

Having an order (an instruction you give us, to open or close a trade for you when the market hits a certain level) filled at a different level to the one you requested. When a market moves a long way in an instant – or ‘gaps’ – any orders you have placed may be filled at a worse level than the one you requested. This is called slippage. Use guaranteed stops for watertight protection against slippage. They're free to place, with a small premium payable only if your stop is triggered.

 

Find out more guaranteed stops

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.

Protect yourself in our platform

Protect against adverse movements for free

Set a stop-loss to close your position automatically if the market moves against you. There’s no trigger charge, but no guarantee of protection against slippage – so your position could be closed out at a worse level if the market gaps.

Choose exactly where your trade closes

Attach a guaranteed stop to your position, and it’ll always be closed out at exactly the price you specified.

What’s more, you’ll only pay for your stop if it’s triggered. If this happens, our guaranteed stop premiums offer excellent value in the market for most major indices and FX pairs.

Don’t miss out on profits

Place a trailing stop when you open your trade and it will move with your profit. If the market turns, your position will close out at your trailing stop’s new level. So you can lock in profits without the need to monitor your position and adjust your stop.

Like regular stop-losses, trailing stops don’t protect against slippage.

Take profit automatically

Set a limit order in line with your profit target, and we’ll close your position for you when the price hits your chosen level.

Stay on top of market movement

Set price alerts, and we’ll notify you by text or email when a market reaches your specified price. Push alert notifications can also be set and are free. They can be set up on our web-based platform and our apps. Different to text and email alerts, push alerts pop up on the trading platform when using a PC, and also on your mobile when using our apps. 

Always know your profit and loss

Keep an eye on the always-visible balance snapshot in our platform, and react quickly if the market moves against you, and deal out almost instantly to protect a profit or minimise a loss.

Other ways we help

Trade with limited risk

You needn’t risk more than you can afford when trading. Our limited-risk accounts can help protect you, ensuring that all your positions either have a guaranteed stop, or are on inherently limited-risk markets.

We decide your account type based on the information you give us when you open an account. You’ll have the option to switch to a limited-risk account once your account’s open. 

Please note, the other stop types you see listed on this page are therefore not available on limited-risk accounts.

Trade with reduced minimums

New clients can trade at reduced minimum trade sizes for two weeks and reduced commissions on Australian shares for six weeks with our introduction programme.

This is a useful way to reduce your risk exposure while you gain experience and confidence using our platform.

Built-in risk protection

Whether you have a stop-loss or not, if the account equity (cash balance +/- running profit/loss) doesn’t cover your margin requirement, we may partially or fully close your positions if we don't hear from you. This is to help protect you from negative equity.

However, this protection isn’t automatic – we are not obliged to apply it and you shouldn’t rely on us doing so. It’s sensible to maintain adequate funds in your trading account to avoid potentially being closed out of positions you would rather remain open.

Learn to combat risk

Become a better trader, and learn more about managing risk, by working through free interactive courses on IG Academy, as well as live webinars.

Open an account now

There's no minimum balance to open an account, it takes less than five minutes, and there's no obligation to fund or trade.

Managing your risk FAQs

How does a stop-loss order work?

When you place a stop-loss order, sometimes referred to simply as a ‘stop order’, you’re instructing your broker to execute a trade on your behalf at a less favourable level than the current market price.

You’ll usually do this to limit your losses on a position, in the event that the market moves against you. Set your stop-loss at a certain level, and your broker will close your position for you when the market hits that level – so you don’t need to watch the markets constantly.

It’s worth remembering that stop-loss orders do not protect against slippage resulting from markets ‘gapping’, or moving a large distance in a split second due to unforeseen external influences. You can ensure your trade is executed at exactly the level specified by using a guaranteed stop. With IG they’re free to place, and carry a small premium if triggered.

If you’re placing a stop-loss order on a long trade – a trade where you’ve bought a market in the expectation that its price will go up – your stop-loss order will be an instruction to sell at a worse price than the one you opened your trade at. Conversely, a stop-loss order on a short trade (where you’re selling a market) is an instruction to buy at a worse price than you opened at.

What’s meant by ‘risk’ in trading?

In trading, ‘risk’ refers to the possibility of your choices not resulting in the outcome that you expected. This can take the form of a trade not performing as you’d thought it would, meaning that you make less – or indeed, lose more – than originally anticipated.

Trading risk comes in a range of forms. The most common is ‘market risk’, the general risk that your trades might not perform based on unfavourable price movements – affected by a range of external factors like recessions, political unrest and so on.

Traders are usually prepared to take on some degree of risk in order to participate in the markets, and hopefully make their trading profitable over time. How much trading risk they’ll take on depends on their strategy, and the risk-reward ratio they’ve set for themselves.

It’s therefore important to recognise how much capital you can stand to risk, both on a per-trade basis and as a whole over time.

You can learn more about balancing risk and reward to create an effective trading strategy in IG Academy, our online hub for learning resources.

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