How to trade CFDs

Types of orders

There are different types of orders you can place, depending on whether you want to trade immediately or wait for a certain price.

The main types of order you’re likely to use regularly are stops and limits.

  • A stop is an instruction to trade at a less favourable level than the current price
  • A limit is an instruction to trade at a more favourable level than the current price

For example, let’s say the FTSE 100 is trading at 6000 and you leave an order to sell at 5890. This is a stop, as selling at 5890 is a worse (less favourable) level than the current price of 6000.

On the other hand, if the FTSE 100 is trading at 6000 and you leave an order to sell at 6110, this is a limit, as selling at 6110 is a better (more favourable) level than the current price of 6000.

To find out about stops and limits in more detail, please visit our orders, stops and limits section.

Attaching a stop

Let’s imagine that you already have an open position, long one contract on Wall Street at 10,856. The position will be displayed in the ‘open positions’ panel in our trading platform. The dashes in the stop and limit columns show that the position currently has no stop or limit attached.

trading_cfds_Open_Positions

You decide to attach a stop order to your position, to close it if the price moves against you. This is also known as a stop-loss. To do this, click on the dash in the stop column.

This will open a ticket that’s already populated with your position’s details.

You enter your chosen stop level of 10,800 in the stop level box.

wall_street_ticket_indices_stop

If you wanted, you could also add a limit level to close out if the market price increases to a specified level. Just remember that your chosen level will need to be at least a specified minimum distance from the current price.

Click submit and a message will pop up letting you know your order has been accepted. You can now see your order in the open positions window.

wall_street_confirm_ticket

Stop orders to open

You might decide that you want to open a position if the market hits a certain level. This could be because your chart pattern analysis suggests that a market will move in a certain way if it breaks a particular level. Instead of having to constantly watch the market, you can set a stop or limit to open a position if your conditions are met. This is also known as a working order.

  • After choosing your market, open the ‘orders to open’ tab
  • You can now populate the fields one by one
  • Pick a direction: buy or sell
  • Select the level at which your order should be filled. The ‘type’ field will automatically be populated with either stop or limit. This is because it’s immediately clear whether your chosen price is a more favourable or less favourable level than the current price
  • Select the number of contracts in the size field
  • Set the timeframe for the order. You can opt for either 'good till cancelled' (which will last until you cancel it), or set a particular time in the future (see below) at which the order will be cancelled 
  • You can also enter any contingent stops and limits you might want
  • Once you’re happy with the details of your trade, click ‘submit’

Trailing stops

Trailing stops are simply stop orders which automatically follow positive movements in the market, maintaining your chosen stop distance and helping you to secure the gains produced by the market movement.

To make trailing stops available, you’ll need to go into ‘Preferences’ in the ‘my account’ section of our trading platform. A ‘trailing’ tick box will then appear in the ‘stops and limits’ section of future deal tickets.

Trailing stops are only available as non-guaranteed stops.

How to place a trailing stop in OUR TRADING PLATFORM

  • Open a deal ticket, set your contract size and enter the number of points away from the current level that you want to place your stop
  • Make sure that the ‘guaranteed stop’ box is unticked, and tick the ‘trailing stop’ box
deal_ticket_wall_street

  • Ticking the ‘trailing stop’ box brings up an extra field. In the 'step' box, enter the increment by which the market needs to move before the stop level is adjusted in your favour. The minimum step you can add may vary depending on market conditions
  • Click ‘Buy’ and you’ll receive a confirmation of your trade. The details of your trailing stop are shown in the ‘stop type’ row

wall_street_confirm_ticket_02

  • When you look at the open positions window, the stop column displays the current level of your stop. The type column next to it will show a T to indicate that it’s a trailing stop, and the number in brackets shows the step size. You can alter your trailing stop by clicking in either of these columns.
Open_Positions2

Slippage

Sometimes, due to market factors, you might not get the exact price at which you intended to trade, but a less favourable price instead – even with a non-guaranteed stop. The difference in points between your desired price and the price that you trade on is called the amount of slippage. Slippage is only incurred with non-guaranteed stops or stop orders to open.

The following factors can cause slippage:

  • A fast-moving market
  • An illiquid market without enough people willing to carry out the other side of the trade
  • A large number of stops placed around the same level

Let’s say you are long one contract of Wall Street at 11,100. You decide you want to place a stop order to close the trade (sell) if the market moves against you. So, you place a non-guaranteed stop at 11,020.

The market moves against you as Wall Street drops to 11,050, but you decide to hold your position a little longer.

The next day, disappointing economic data causes markets to drop further and our Wall Street price falls quickly below your stop level. You can see by the table on the right how quickly markets can move, so it’s good that you had a stop in place.

Time (AEST)

Our Wall Street price

16:27:15 11026/11028
16:27:19 11025/11027
16:27:21 11021/11023
16:27:33 11020/11022
16:27:34 11019/11021
16:27:35 11013/11015
16:27:39 11012/11014

You can see that our bid price hits your chosen stop level of 11,020 at 16:27:33 (underlined). This is when your stop order is triggered, but it’s executed at the next available price of 11,019 at 16:27:34 (green). You have paid 1 point in slippage, but are protected from the rest of the price drop.

Guaranteed stops attached to orders to open

Guaranteed stops come at a small premium, which is charged only if the stop is triggered, but are not affected by slippage. To place one:

  • OOpen a deal ticket as usual
  • When you enter the details of your stop, tick the guaranteed stop box. Notice that the trailing stop box will become greyed out
guaranteed_stops_to_open


  • Choosing a guaranteed stop will cause the margin requirement to change, and the amount includes the potential fee for the guaranteed stop. 
wall_street_confirm_ticket_03

  • In your open positions window, the stop column displays the current level of your stop, and the type column next to it will show a G to indicate that it’s a guaranteed stop.
Open_Positions3

Order timeframes

When setting an order, you need to decide how long you want the order to stay working for. You might want the order to last for a few hours, a day, or indefinitely.

Orders will either be GTC (good till cancelled) or good till a specified time.

 

Good Till Cancelled

The default setting is ‘good till cancelled’ which means that the order will stay open until 1) you cancel it, 2) the order is filled, or 3) the period for that market expires (in the case of forward contracts).

Good till a specified time

If you want your stop or limit order to expire if your target level isn’t met before a given point, you’ll need to enter an expiry date and time.