CFD trading comes with a unique set of risk. That’s why we’ve compiled a guide with risk management tips, tools and techniques. Find out how to manage your trading risk when using leveraged derivatives, and access our free educational resources.
How can I manage my risk when trading?
Manage unfavourable market movements by using stop-losses and guaranteed stops1
Set limit orders to automatically buy or sell when the market level is more favourable
Become better at combating risk by using free educational materials, like IG Academy
Set alerts and we’ll notify you when a market reaches your specified level
Get a balance snapshot on our platform to easily view your gains and losses
Never go below zero with negative balance protection2
In trading, ‘risk’ refers to the possibility of your choices not resulting in the outcome that you expected. Trading risk comes in a range of forms. The most prominent risks you’ll face when trading CFDs are:
There are various risks involved in trading, and different reasons to why they might happen. The most important thing to remember is that you should take steps to mitigate these risks.
| The risk | Why it happens | Ways we help |
| Losing more than your deposit on a trade | CFDs are leveraged, so you only need to put up a fraction of your position’s value to open it but your profit or loss could be much more than your initial deposit | You can set an automatic stop or limit, to define the level you’d like your trade executed at |
| Having your positions closed unexpectedly | You need a certain amount of money in your account to keep your trades open. This is called margin, and if your account balance doesn’t cover our margin requirements, we may close your positions | Keep an eye on your always-visible running balances in our platform or app, and add more funds if they’re needed |
| Losing more than the money in your account | Sometimes your positions may be closed out automatically, leaving you with a negative account balance | We offer negative balance protection, and we bring negative accounts back to zero at no cost to you.1 |
| Sudden or larger-than-expected losses | Markets can be volatile, moving very quickly and unexpectedly in reaction to announcements, events or trader behaviour. This could have significant bearing on your open positions | As well as setting stops, you can also be notified of significant movement by setting a price or distance alert, giving you the choice of whether or not to react |
| Having an order filled at a different level to the one you requested | When a market moves a long way in an instant – or ‘gaps’ – any orders you have placed may be filled at a worse (or better) level than the one you requested. This is called slippage | Use guaranteed stops for protection against slippage on orders to close. They’re free to place, with a small premium payable only if your stop is triggered |
We have a range of risk management tools available. Plus, you’re protected through negative balance protection.2
Set a stop-loss to close your position automatically if the market moves against you.
There’s no trigger charge, but no guarantee of protection against slippage – so your position could be closed out at a worse level if the market gaps.
Stop Loss?
Set a stop-loss to close your position automatically if the market moves against you.
There’s no trigger charge, but no guarantee of protection against slippage – so your position could be closed out at a worse level if the market gaps.
Guaranteed stops
Attach a guaranteed stop to your position, and it’ll always be closed out at exactly the price you specified.
You’ll only pay for your stop if it’s triggered. If this happens, our guaranteed stop premiums still offer the best value in the market for most major indices and FX pairs.
Limit orders
Set a limit order and we’ll execute your trade at a predetermined level that is more favourable to you than the current market price.
You can set a limit entry order to open a new position or a limit closing order to terminate an existing position.
Negative balance protection
Your account will never go below zero – even if the market gaps – thanks to negative balance protection.2
We apply negative balance protection to all retail clients’ accounts.
Built-in risk prot
To help protect you from excessive losses, we’ll sometimes close your positions if you’re on margin call.
However, we can’t always apply this protection and it’s sensible to maintain adequate funds in your trading account to avoid potentially being closed out.
