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I am trying to get to grips with stop loss. My account is £2,500. I buy/sell at 1.0000 with no stop loss. I trade at a size of £5. At what point would I be stopped out if there was a large spike?

If my trade size was £1 would this be 5 times more?

 

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Hi @Cedric,  if you don't have a stop loss in place you won't be stopped out at all, if there is a large spike you would get a belated margin call by which time your account is probably at zero.

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15 minutes ago, Caseynotes said:

Hi @Cedric,  if you don't have a stop loss in place you won't be stopped out at all, if there is a large spike you would get a belated margin call by which time your account is probably at zero.

Thanks for your speedy reply. If I buy/sell at a price 1.0000, size £1. At what price price would I get a belated margin call. I am trying to find out what the length of that spike (in pips) would have to be relative to the account size and trade size. 

At the moment I have a Demo a/c and a month ago I inadvertently increased the capital to £999.999.00. As you probably know a few weeks ago there was a larger than normal spike and I wasn't stopped out. This is why I am now trying to understand why.

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@Cedric, haha yes, I did the same thing, somehow ended up with a demo account of £10 million and you are right it spoils any attempt to keep it real. You can't reset it so the thing to do put some massive losing bets on and get it back to zero and then refund it again to the amount you want and start over.

So from there when you fill out the deal ticket the margin requirement for the bet size and account size is auto calc'd on the deal/order ticket for you. The amount of risk (your stop size x bet size) is also auto calc'd for you as well.

For a £2,500 account with a £5/point bet price would have to move against you 500 points to blow the account but the margin call would kick in at £1,900 (around 380 points) but this calc is dependent on the price of the asset (which you gave at 1.0000) so if you shorted and price went to 1.0380 the bet would be shut down and you would be left with £600 if you didn't add to the account on the margin call.

That's my 'back of a **** packet' calc so may well be wrong so best use the auto calc on the ticket.

1/ Always use some kind of stop loss.

2/ If you are worried about big spikes stick with a guaranteed stop loss.

2/ Keep a good amount of lee way between the margin requirement and account size for any trades.

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@Cedric,

Yes @Caseynotes point on keeping a good amount of distance between the margin requirement and account size for any trade is very important. It is often a factor a lot of new traders neglect. It is extremely important when using leverage on a trade as if the price moves against your direction of trade then the leverage can increase the losses incurred. It may only be very short term and temporary before recommencing in the direction you have opened a trade in but nevertheless it is an important point. 

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On 11/01/2019 at 15:34, Caseynotes said:

Hi @Cedric,  if you don't have a stop loss in place you won't be stopped out at all, if there is a large spike you would get a belated margin call by which time your account is probably at zero.

Can you direct me how to set a stop and loss and what it is fully about. I am new to this and have only done one trade. I have also set a limit order to buy some FAR shares for when the market opens at tomorrow. When I set the order for tomorrow, I was only given the option for a limit day order at one price. There was no stop/loss option

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@gcarter & @elle,  I suspect carter is referring to the shares dealing platform which currently doesn't have a stop loss facility incorporated as does the spread bet and cfd platforms, though the expected release of the new shares platform should resolve that when that may be.

Essentially a stop loss is an order in the market which is the equal and opposite of the entry order and so cancels out the position.

So if you have entered a trade of x amount you need to manually place a stop order of equal amount at the price level you want to exit that trade should price reverse and go against you.

Not sure about FAR shares and only limit and one price, doesn't sound right, can you give ant more info?

 

 

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