There is a big difference between accepting risk and risk management.
Stop loss vs Guaranteed Stop loss
- Thread starter FormulaOneFan
- Start date
- Watchers 7
There is a big difference between accepting risk and risk management.
Yes they can, but most hardly ever do (excluding earning announcements but we know those dates).
One can also get slipped 10-20+ ticks on the FTSE, but hardly ever (excluding big announcements but we know those dates/times).
Ask yourself the question why they're only offered to small time spread bet clients and not the big funds. The answer is proper traders know their real costs whereas small spread clients fall for the scare marketing tactics (if you don't use them potential slippage might kill you!)...
As I said before, if you ever get offered a 'good deal' by a financial services company, especially to do with insurance, they're NOT lying. It is a good deal, for them, not you :cheesy:
True, but the price of risk management also plays an important role. And the price of the guaranteed insurance is horrific over many trades, far more than if the trader accepted the slippage (which may of may not come, and if it does is often not bad at all).
By all means use a guaranteed stop on a few trades here and there for whatever reason but to constantly use them is a sure fire way to effortlessly transfer one's cash balance to the spread bet broker, and that's why the client that uses them a lot is going to become a very 'valued client'.
Forget owning a Casino, I'd like to be the one underwriting the risk on all the guaranteed stops, talk about a licence to print money overtime.
I don't believe anybody is suggesting the use of quaranteed stop indiscriminately but rather specific to each trader's situation.
tar
Legendary member
- Messages
- 10,443
- Likes
- 1,314
+1 Exactly , GSL is a useful tool for stocks swing traders , and professionals do use similar protection methods through options ...
Trevor2522
Member
- Messages
- 55
- Likes
- 0
On 6th January 2014 I got caught-out on slippage by a rapid Gold & Platinum fall at 15.04 GMT using regular stops. Stocks are also vulnerable to gapping up or down overnight. Currencies and indices are more stable, so regular stops are normally OK. Guaranteed stops are useful for those brave enough to trade anything across Non-Farm Payroll events. Don't trust the smiley PR guy David Jones from IG (formerly of CMC) who says you never need to use them (he also says all technical indicators are useless -- clearly a good company man).
Rule #1: Always use guaranteed stops with commodities & stocks.
Rule #2: Don't leave positions open over weekends unless using guaranteed stops.
IG Index spreadbetting actually reduces the margin requirement for guaranteed stop losses, although it widens the spread slightly. Fair enough. Their fixed 81% return on up/down binaries is mean though.
Rule #1: Always use guaranteed stops with commodities & stocks.
Rule #2: Don't leave positions open over weekends unless using guaranteed stops.
IG Index spreadbetting actually reduces the margin requirement for guaranteed stop losses, although it widens the spread slightly. Fair enough. Their fixed 81% return on up/down binaries is mean though.
Last edited:
"A grave hit on the financial front was registered in the third quarter of 2013, due to a string of unsuccessful trades in four securities listed on the Singapore Exchange by several customers of Interactive Brokers. The value of the securities dropped by 90% in very short time and the company now suffers an aggregate loss of $73 million as a result of this"
http://www.forexbrokerz.com/news/interactive-brokers-2013-fy-results
http://www.forexbrokerz.com/news/interactive-brokers-2013-fy-results
