How to manage your trading risk

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?

Choose your trades’ exit points

Manage unfavourable market movements by using stop-losses and guaranteed stops1

Execute trades at favourable levels

Set limit orders to automatically buy or sell when the market level is more favourable

Use our online learning portal

Become better at combating risk by using free educational materials, like IG Academy

Stay on top of market movements

Set alerts and we’ll notify you when a market reaches your specified level

Know your profit and loss

Get a balance snapshot on our platform to easily view your gains and losses

Get negative balance protection

Never go below zero with negative balance protection2

What is meant by ‘risk’ in trading?

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:

  • Market risk: the general risk that your trades might not perform as you thought it would, due to unfavourable price movements. The market can be affected by a range of external factors like recessions, political unrest, etc.
  • Impact of leverage: trading on leverage – ie using margin – amplifies profits and losses, as your risk isn’t limited to your initial outlay. Your gains and losses will be based on the full trade value, and you could lose more than your deposit
  • Lack of knowledge: failure to study the markets and doing thorough analysis can be detrimental. You should learn as much as you can about trading and the asset you’re looking to buy or sell before opening any positions
  • Emotional trading: it’s not always easy to control your emotions when trading. Impulsivity, fear and greed – to name a few – can take over, and you might end up making poor trading decisions
The types of risk in trading: market risk, impact of leverage, lack of knowledge and emotional trading

What are the risks of trading?

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 riskWhy it happensWays we help
Losing more than your deposit on a tradeCFDs 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 depositYou can set an automatic stop or limit, to define the level you’d like your trade executed at
Having your positions closed unexpectedlyYou 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 positionsKeep 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 accountSometimes your positions may be closed out automatically, leaving you with a negative account balanceWe offer negative balance protection, and we bring negative accounts back to zero at no cost to you.1
Sudden or larger-than-expected lossesMarkets can be volatile, moving very quickly and unexpectedly in reaction to announcements, events or trader behaviour. This could have significant bearing on your open positionsAs 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 requestedWhen 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 slippageUse 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
The many ways to manage your trading risk with IG

Protect yourself with our risk management tools

We have a range of risk management tools available. Plus, you’re protected through negative balance protection.2

  • Stop-losses
  • Guaranteed stops
  • Limit orders
  • Negative balance protection
  • Built-in risk protection
  • Price alerts

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.

A screenshot of stop orders and how they can be used on the IG platform

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.

Graphic showcasing negative balance protection.

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.

What is margin call?

The built in risk cycle

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