When you open a new position or pending order, or edit an existing position you can set stop-limit and stop-loss orders. These orders allow you to set a specific rate at which your position will close. This will protect your profit in the case of take profit order or minimize your loss in the case of stop-loss order. Stop-limit and stop-loss orders do not guarantee that your position will close at the price level you have set. If the market price is above or below your stop level, it is possible that your position will close at the next available price level which may differ from the price you set. This phenomenon is called ‘slippage’.
Gold CFD is trading at $1,405/$1,410 (sell price/buy price) troy ounce. You decide to buy 10 troy ounces of gold at $1,410 and set a stop-loss order at $1,390.
The Gold CFD price drops to $1,390 and later to $1,350. Your position automatically closes at a price of $1390. Your loss is: 10 * (1,390 - 1,410) = -$200 If the Gold CFD price drops from $1,410 to $1,350, the position closes at a price of $1,350 instead of $1,390 which was set as a stop-loss. Since the stop is not guaranteed.
So, when the price drops below $1,390, the position closes at the next available price level, namely $1,350. In this case your loss is: 10 * (1,350 - 1,410) = -$600
Adding a guaranteed stop order to your trading position limits your potential loss. Even if the price of the instrument changes not in your favor, your position will automatically close at the specified price without the risk of slippage. Guaranteed stop is available only for some instruments. If a guaranteed stop can be applied to the instrument, there is a checkbox on the platform (after selecting the stop-loss order).
A guaranteed stop order can be set on a new trading position or pending order and cannot be added to an existing position. A guaranteed stop can be activated or edited only if the instrument is available for trading. When a guaranteed stop order is activated, it cannot be removed. You can only change or remove the stop-loss order.
The additional spread charge for a guaranteed stop after its activation is non-refundable and will be displayed before approval. The price level of the guaranteed stop should be different from the current trading price of the instrument.
Apple shares CFD is trading at $275/$277 (sell price/buy price) per share.
You decide to buy 10 shares on CFD and set a guaranteed stop at a price of $257. The spread adjustment for a guaranteed stop is $200.
The Apple CFD price drops below $100, but your position closes at a price of $130.
With a guaranteed stop your loss is: 10*(257 - 277) - 10 [spread adjustment for a guaranteed stop] = -$210
Without a guaranteed stop your loss is: 10*(200 - 250) = -$500
A trailing stop order helps you to lock in your profits. If you open a position or pending order with a trailing stop, it will automatically close when its price changes by a specified amount of pips* not in your favor. Trailing stop allows you to set a stop-loss order which is automatically updated when the market moves in your favor. The stop-loss order is activated if the market price moves not in your favor (in accordance with the set pips change). This feature is free, but it does not guarantee that your position will close at the exact stop-loss level, because of slippage.
The EUR/USD price is 1.19400/1.19500 (sell price/buy price). You decide to open a buy position for 100,000 units and set a trailing stop at 100 pips (100 pips = 0.00100). A trailing stop is set at the sell price of 1.19300 (1.19400 - 0.00100). The EUR/USD price begins to rise and reaches 1.19450. The trailing stop order tracks the change and becomes equal to 1.19350 (1.19450 - 0.00100).
The EUR/USD price continues to rise and the sell price reaches 1.19750. The trailing Stop order automatically adjusts according to the new market price, and becomes equal to 1.19650 (1.19750 - 0.00100).
If the price of EUR/USD suddenly falls by 100 pips (i.e. to 1.19650, price of your trailing stop) or more, Trailing Stop will execute the order at a price of 1.19650 if possible. Otherwise, the position will close at the next available price level.
If the position closes at a price of 1.19650, your profit is: 100,000 * (1.19650 - 1.19500) = €150 (thanks to the trailing stop you could lock in your profit).