The benefits of a guaranteed stop-loss

A stop-loss is a key tool to manage risk by setting a loss limit in advance. Unfortunately, many brokers have made this simple concept too complicated to execute in actual trading conditions. Slippage and market gaps do not allow traders to set an absolute limit on their potential losses. It is for these reasons that the guaranteed stop-loss is extremely important.

A stop-loss order has a number of advantages:

      It eliminates the emotional aspect of trading decisions.
      It prevents major losses and costs nothing.
      No need to monitor your position regularly, the stop order is triggered automatically.

A guaranteed stop-loss allows traders to place an absolute limit on their loss without having to worry about slippage (the point-difference between the desired price and the one actually obtained). A number of factors influence slippage, such as volatile markets, markets that lack liquidity with an irregular supply/demand for a particular security and a large number of stop losses placed at the same level.

Most of the time, guaranteed stops loss orders entail a small fee. However, the easyMarkets brokerage offers them for free, and they also guarantee take profit orders. EasyMarkets accounts benefit from protection against negative balances, so your risk is limited to the funds you have deposited.