Which is better a normal stop loss
or a guaranteed stop loss
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Last update : July 2010
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| Personally I'm no fan of guaranteed stop losses as they're costly to use, plus you pay for them upfront even if they're not needed.
But there are a few occasions where I might consider using them such as when trading a much larger position than normal or in an extremely volatile market.
But guaranteed stops versus normal stops is not really the right question.
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| To me it's not so much which stop you use, it's that you use one on all your trades. Because if you don't use some sort of mechanism for taking losses, which are as much a part of speculation as profits, and you trade margined products then any given trade has the potential to get completely out of hand and decimate an account.
The streets of the City of London are littered with good traders who lost it all due to poor risk management on just 1 or 2 trades. So take note and always use a stop loss.
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| The importance of getting the right spread bet broker |
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There are good spread bet brokers and bad ones. Having a good broker won't guarantee you profits but a bad broker will probably lead to losses as a combination of their gamesmanship and suspect software takes its financial toll.
So who do I recommend? Simple, the 2 brokers I personally use for my own spread betting. Read this page for more details.
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