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FAQ Page 3 - Question 25

Q: I'm new to spread betting and want to know if I should use normal stop losses or guaranteed stop losses?

A: There is no right answer to this question. But the correct answer (for you) will come over time, as you build up some experience. What I will say is this, veteran spread betters hardly ever use guaranteed stop losses while new traders often do.

Go and read the explanation of guaranteed stop losses with spread bets by clicking here, and make sure you understand the financial implications of using them. Then consider if it is an expense that is worth paying.

What I will say about stop losses in general is this. To me the most important point regarding stop losses is that you should have one, not at what level it is, or whether it is guaranteed etc. If you don't use stop losses or some other regimented way to take losses when dealing with margined products like spread betting, the market will likely get hold of the majority of your money at some stage in the future.

Perhaps the most critical factor of using stop losses is that means that you've thought of the potential risk to a trade, and as we've seen many times throughout this website, managing risk is the critical component of successful trading.