Guaranteed stop definition

What is a guaranteed stop?

A guaranteed stop is a type of stop-loss that ensures your position is always closed at your pre-selected price. It is a common risk management tool, used to protect your trades from unnecessary losses while removing any risk of slippage.

Guaranteed stop vs basic stop

A basic stop-loss acts as an instruction to your broker to close your position once it hits a set price that is less favourable than the current price. They can be a useful tool, but if slippage occurs – which can happen when a market gaps significantly or hits a period of high volatility – then your order may not be carried out at the price you specified.

Guaranteed stops ensure that gaps or volatility don’t impact your position. Aside from this, they operate in exactly the same way as standard stops.

Using a guaranteed stop

With IG, you can use guaranteed stops on spread bets or CFD trades by placing a stop as normal on the deal ticket and ensuring you tick the box that says ‘guaranteed stop’.

You will usually be charged a fee for using a guaranteed stop, as your provider is taking on the risk of slippage for you. When trading with IG, you’ll only pay for your guaranteed stop-loss if it is triggered.

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Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 79% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money. Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.