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Contract For Differences Order Types

There are many different methods of placing a Contract For Differences order.

Conditional Orders

Conditional Orders such as Limits, Stops, if done and OCOs help you manage your risk. By using these additional Contract For Differences order types you have the ability to effectively control potential profits as well as potential losses on your open positions. Conditional Orders can be placed either as Day Orders or Good ‘Til Cancelled (GTC).

Day Orders

Conditional Orders can be placed as Day Orders. A Day order means that the CFD order you place will either be executed or cancelled at the end of that trading day. Should you want to maintain that order in the market the next day, you will have to resubmit that contract for differences order on the next trading day.

Good ‘Til Cancelled (GTC)

Conditional Orders can also be placed as Good ‘Til Cancelled. A Good ‘Til Cancelled (GTC) order means that your CFD's order will remain in the market until it is either executed according to the terms of that order, or is cancelled by you.

Please Note: Please remember to cancel any conditional orders you have placed that you no longer require, as failure to do so will result in that order remaining in the market at risk of execution (and the possibly the creation of a new open position).

Limit Orders

A Limit Order can be used to either open a new position or close an existing open position at a predefined price set by you, which may be more favourable than the then current price for that instrument. Limit orders are executed at the price you specify.

Example - Limit (GTC) order to close an open position
You have an existing open position of long 2000 Vodafone CFDs. Whilst the market is showing Vodafone trading at 140/140.25, you believe Vodafone will strengthen further to 145. You place a Limit order to sell 2000 Vodafone CFDs at 145. This Limit order will remain in the market until it is executed at 145 or cancelled.

Example - Limit (Day) order used to open a new position
Whilst the market is showing Vodafone trading at 140/140.25, you believe Vodafone will fall to 134, you place a Day Limit order to buy 2000 CFDs at 134. This Limit order will remain in the market until it is executed at 134 level or cancelled at the end of its trading day.

Stop Orders

A Stop or ‘stop loss’ order is an order normally placed to limit the loss on an open position. It is therefore good practice to place this type of Conditional order to control any potential losses of your open position(s) should the market move against you. A Stop Order can also be used to enter the market at an inferior rate, allowing you to enter the market on a ‘breakout’ of the current trading range.

Example - Stop (GTC) order to close an open position
You have an existing open position of short 2000 Vodafone CFDs. Whilst the market is showing Vodafone trading at 140/140.25, you believe Vodafone will strengthen further to 155. You place a GTC Stop order to buy 2000 Vodafone CFDs at 155. This Stop order will remain in the market until it is executed at 155 or cancelled.

Example - Stop (Day) order used to open a new position
Whilst the market is showing Vodafone trading at 140/140.25, you believe Vodafone will rise through 155, you place a Day Stop order to buy 2000 CFDs at 145. This Stop order will remain in the market until it is executed at 145 or cancelled at the end of its trading day.

Please Note: The execution of any Stop order(s) at the specified order price is not guaranteed. The placing of a Stop order indicates the level at which you wish to execute that order. Once this level has been reached or breached, your order will be executed at the next available market price (which may or may not be at the price placed).

One Cancels the Other (OCO)

This is the combination of both a ‘Limit’ and a ‘Stop’ Order. It is an order that can be used to take a profit if the market moves favourably to the open position or to limit the loss if the market moves against the open position. The execution of one order will automatically cancel the other order.

Example
Using the above CFD Limit and Stop orders as examples. You are long 2000 Vodafone CFDs at 140.25, and place an OCO with a Limit Sell Order at 148, and a Stop Loss Sell at 134. If either the Limit or the Stop Loss order is executed, the ‘other’ order is automatically cancelled.

If Done

This is again a combination of both a ‘Stop’ and ‘Limit’ Order. It is an order that will allow you to enter a new position at the desired price and once triggered, activating a ‘Stop’ or Limit’, to protect your position.

Example
Using the above CFD Limit and Stop orders as examples. Whilst the market is showing Vodafone trading at 140/140.25, you want to buy 2000 Vodafone CFDs if the price falls to 134, You place a Limit Order to buy at 134, and an if done Stop Loss to sell at 125. When the Limit is triggered the ‘Stop’ Loss becomes an active pending order.

Securities and Derivatives markets may be subject to rapid and unexpected price movements and past performance is not necessarily a guide to future performance. Trading in these markets is generally considered to be suitable only for the more experienced investor as it carries a high degree of risk. An investor may not receive back the amount of their original investment and in certain circumstances may be liable for a sum that is greater than their original investment. If in any doubt, please seek independent financial advice.