Four order types every spread better should know
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Deputy Editor
Tim Bennett Aug 16, 2010
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Once you have decided what you want to bet on – say the BP share price or the FTSE 100 index – and how much you want to stake per point, you need to decide how you plan to enter and exit a trade. Although professional traders use a range of orders, as a new spread better you should aim to master four initially. All should be available through most spread betting brokers.
The limit order
This is an instruction to open (usually) a position at a "no worse than" price. It's useful when the market is volatile as you get to specify a maximum buying price or a minimum selling price. The trouble is if the market spread never reaches that price your order won't be executed.
The market order
This gets you into the market – again either long or short – at the current market bid or offer price. It's simple to understand and generally a safe bet provided prices are not moving too far or too fast.
The stop order
This gets you out of a trade at a specified closing price. The problem is, it may not! If a lot of orders to close out at a particular price hit the market together it creates price "gaps" – first come first served is the usual rule. So your stop order may not get filled at the price you want.
The guaranteed stop
In effect a closing limit order. Here you pay a bit extra, in the form of a wider bid to offer spread, to ensure that your stop order is triggered at exactly the price you tell your broker.
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