Margin Leverage and Position Sizing · CFDs Trading Guide

A stop instruction and a guaranteed exit are different promises. Model what happens when the market jumps past the price you planned to use.

Understand the trigger

An ordinary stop generally triggers an order when the relevant quoted price reaches its level. Execution can occur at a worse price during a gap or rapid move. A stop limit adds a price constraint, but it can remain unfilled. That protects the execution price condition while leaving the position exposed. Confirm the exact platform mechanics.

Calculate the gap scenario

A long position of 100 units opens at $50 with an ordinary stop at $48. The planned price loss is $200. If the next available executable price is $45, the loss becomes $500 before charges. The missing prices between $48 and $45 were not necessarily available for an exit, even if a chart draws a continuous line.

Read a guaranteed stop contract

Where offered, a guaranteed stop commits the provider to a specified exit under its terms. Eligibility, minimum distance, size limits and premium rules vary. It does not protect against every unrelated account risk or provider failure. Verify whether the premium is charged when placed or triggered and what happens when the order is changed.

Budget for uncertainty

Ordinary stops remain useful instructions, but a risk plan should test worse fills and unavailable markets. Reduce exposure before events when the possible loss is unacceptable. An account level negative balance protection rule, where applicable, is different from a loss limit on one trade. Both the contract and client classification matter.

Try it yourself

A long position has 80 units entered at $25 and a stop at $24.20. It fills at $23.90. Find planned price risk, actual price loss and slippage cost.

Show the worked answer

Planned risk is 80 × $0.80 = $64. Actual loss is 80 × $1.10 = $88. The worse fill adds $24 before any other charges.

Further reading

Educational material, not a recommendation to trade. Numerical examples are hypothetical. CFDs involve leverage and substantial risk of loss. Availability, costs and protections depend on the contract, legal entity, jurisdiction and client classification.

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