Use Stops To Protect Profits

Online, July 9, 2012 (Newswire.com) - Online trading education site IndependentInvestor.co.uk has said that traders should focus more on the use of stops, both as a limiter to losses and in protecting gains in spread betting, for more effective aggregate results from trading the markets.

The use of stop orders (read more about orders in spread betting) automates the process of establishing a market order to buy or sell a position, and can therefore be used to impose ceiling and floor prices on markets and a trader's potential liability. By using stops to shelter gains and cut off any runaway losses prematurely, IndependentInvestor.co.uk believes traders can better assure an ultimate trading profit.

While stops that are too tight run the risk of choking off potentially successful positions, they can be used to minimise exposure to risk and ensure maximum profits can be taken when available.

A spokesperson for IndependentInvestor.co.uk said that the use of stops can have a dramatic effect on the outcome of a trading account, preventing losses from damaging capital and locking in win-win situations for traders at the successful end of the market.

"Stops are an often underestimated tool open to spread traders, and one that we think should be used more often. We tend to think of stops as a way of preventing serious losses, which can be limitless if not protected, yet they also have a role to play in helping traders cement a profit and protect their earnings from potential market reversals. Implementing stops where viable on a regular basis will help tighten results and help squeeze the optimum profit from each single transaction."

"Stop losses and limits can be used to great effect, in conjunction with a range of strategies. By taking the burden of monitoring the extremes off your hands, they are a means of increasing trader efficiency and allowing greater diversification across the account. When you add in the impact on the positive and negative sides of transactions, we feel stops are a no-brainer in most circumstances - particularly for those trading over any a day or more."

About:
IndependentInvestor.co.uk is an online financial trading resource packed with tutorials, tools and strategies for more successful spread betting online. Written by experienced, successful traders, IndependentInvestor.co.uk is independent of any brokers, so positioned to deliver impartial honest advice about how to choose the most effective spread betting broker for your needs, and how to make the most of trading in spread betting and a number of other financial trading styles.

Traders can compare spread betting and other financial brokers at a glance thanks to independent reviews and comparison tables showing the range of service plans available across financial spread betting providers.