At City Index, we know that risk management plays an important part in determining your trading success. We have, over the past 25 years, created an extensive range of order types to help you manage your risks and reach your trading potential.
Orders can be used as trading tools that allow you to open, close, or amend your trade at prices dictated by you. An order is an instruction to execute a trade when the price of a market reaches a trigger value set by you and can help you to be flexible with your trading decisions and manage risk. Orders can be used to support a range of different trading strategies.
Financial Spread Betting Order Types:
Opening Orders
Limit Order: An order to automatically open a trade at a better price than the current 'Our Price' of a market, providing the price of the market reaches the specified order level.
Stop Order: An order to automatically open a trade at a worse price than the current 'Our Price' of a market, providing the price of the market reaches the specified order level.
One Cancels the Other (OCO): An order allowing you to take multiple views on the same market by placing two simultaneous opening orders. When 'Our Prices' trigger one order, that order will be executed whilst the remaining order will automatically be deleted.
Closing Orders
Closing Orders are orders to automatically close a trade at a better price than the current 'Our Price' of a market, locking in profit.
Stop Loss Order: An order to automatically open a trade at a worse price than the current 'Our Price' of a market, normally for a loss.
If Done/Contingent Order: These are closing orders attached to opening orders that will be activated once the opening order has been executed into a live trade.
Order Examples:
Opening Orders
Limit Orders: A limit order can be used to execute a trade at a better price than the current price for a market.
- Buying Long: You could use a Limit Buy Order to create a new open position at a price which is lower than the price quoted at the time.
- Selling Short: You could use a Limit Sell Order to create a new open position at a price which is higher than the price quoted at the time.
Stop Orders: A Stop Order is an instruction to execute a trade when the price reaches a worse price than the current 'Our Price' for a market.
- Buying Long: You could use a Stop Buy Order to create a new open position at a price which is higher than the price quoted at the time.
- Selling Short: You could use a Stop Sell Order to create a new open position at a price which is lower than the price quoted at the time.
Closing Orders
Limit Orders: A limit order can be attached to an open trade to automatically close the position at a better price, allowing you to lock-in a profit.
- Long Stock ‘A’ at 321: If you want to take profits at 360, you can set a Closing Limit Order to sell at 360.
- Short Stock ‘A’ at 359: If you want to take profits at 320, you can set a Closing Limit Order to buy at 320.
Stop Loss Orders: A Stop Loss Order can be attached to an open trade to automatically close the position at a worse price for a loss. It is therefore a key tool to help minimise your losses in the event that a price moves against you.
- Long Index ‘A’ at 4250 If you want to take losses at 3750, you can set a Closing Stop Loss to sell at 3750.
- Short Index ‘A’ at 4000 If you want to take losses at 4500, you can set a Closing Stop Loss to buy at 4500.
Please note that Market Gapping may occur. This is explained in more detail below.
Market Gapping and Slippage
Market Gapping occurs when prices literally gap between one price and the next, without trading at the prices in between.
A standard Stop Loss Order does not fully protect your trading risk. As outlined earlier, a Stop Loss Order is set at a specified price which, when reached, automatically triggers an Order to close your position. The closing trade is executed at the next available price immediately after the Order is triggered. This can be at the same, a better or a worse price than the specified execution level. In cases of severe gapping, the execution price may be at a substantially worse price than your Order price.
Guaranteed Stop Loss Orders (GSLO): A Guaranteed Stop Loss Order ensures that the level at which an order will be executed is the exact level that's been specified by the trader, regardless of any gapping in the market.
Guaranteed Stop Loss Order Fundamentals:
- GSLO Premium – there is an additional charge for placing a GSLO upon confirmation of the order.
- Amendments – a GSLO can be amended without additional charges and during trading hours only.
- Minimum Distance – Order levels must be placed a minimum distance above and below the current 'Our Price'.
- Availability – GSLOs are not available on all our markets. Please refer to our Market Information Sheets below to find out if we offer GSLO on a particular market.
It is advisable to use risk management orders especially during the following conditions:
- You are trading in volatile markets
- You don’t want to risk more than your initial deposit
- The market is prone to gapping
Guaranteed Stop Loss Order ExampleSay you are Long Stock ‘A’ at 150p with a Guaranteed Stop Loss Order placed at 130p. Stock ‘A’ closes at 135p on Tuesday.
On Wednesday, the company announces disastrous results before the market opens. This means that when trading hours begin, Stock ‘A’ prices open at 125p, much lower than the previous close.
If you had placed a standard Stop Loss Order, the trade would have been automatically closed at 125p. However, as the Stop Loss was guaranteed, the trade is automatically closed at the specified 130p.
How long are orders valid for?
You can choose how long you would like us to maintain your order by selecting the relevant ‘Good Until’ setting.
Good Until Settings:
GFD or Good for the Day: Effective only on the day on which these orders are placed. If the market trades during fixed trading hours (not 24 hours), then it will expire at the end of the day’s trading hours. If the market is 24 hours, the order will expire at midnight.
GTT or Good till Time: Applicable and effective from the day it is placed until a date and time specified by you.
GTC or Good till Cancelled: Applicable and effective from the day it is placed until you cancel it.
Please remember that if you leave unlinked orders to close a position, and if you close your position prior to the orders being triggered, then these orders will not automatically be cancelled and may end up opening a new position.