Forex Brokers with a Guaranteed Stop Loss

A stop loss is generally your protection against losing too much from bad trades or unexpected market events on the currencies that you are trading online. Whether a trader or investor is looking to try and prevent excessive losses, limiting risk exposure or just locking in profits, almost all forex trading strategies can benefit from using a stop loss. This can be especially important when trading with high leverage or using risky strategies. However, even then there can be unexpected slippage and gaps in prices which can cause devastating losses. This is where using a forex broker with a guaranteed stop loss can be beneficial.

What is a stop loss?

A stop loss order is a money management tool that is used by forex traders and investors who want to limit losses and reduce risk exposure. With a stop loss order in place, a trader can exit a trading position that they hold if the price goes against them according to the limit that they set.

A stop loss order can reduce or limit the risk of a trade and help plan your money management correctly. If you know what your stop loss level is, then you can set a take profit level that gives you a suitable risk to reward ratio, depending on your trading strategy.

If you do not have a stop loss in place, things can get ugly really quickly when trading forex. The forex market is the world’s largest financial market where trillions are traded daily. This means that price can move a significant distance before you know it. This is why a stop loss is important to try and protect against unnecessary losses.

What is a guaranteed stop loss?

A guaranteed stop is a type of stop-loss that ensures your position is always closed at your pre-selected price. It is a common risk management tool, used to protect your trades from unnecessary losses during times of volatility.

When market conditions are very volatile, there can be slippage (delays) on orders and the forex market can have big gaps in price. This can result in your stop loss order being triggered at a different price to what you have initially set. This is why using guaranteed stop loss orders is important for volatile markets that experience large price fluctuations.

How do guaranteed stop losses work?

Guaranteed stop loss orders work exactly the same as regular stop loss orders except that, for a premium charge from your broker, they guarantee to close you out of a trade at the price you specify, regardless of market volatility or gapping. If the guaranteed stop loss is not triggered, 100% of your premium can be refunded by some forex brokers.

Do I need a guaranteed stop loss forex broker?

I personally think that it is vital to protect a forex trading account as much as possible. Things that can help achieve this include using a regulated forex broker with negative balance protection and a guaranteed stop loss. Without any of these elements in place, you could end up losing all of your investment and then some. Trading forex successfully is already hard enough as it is, so we don’t need to put extra pressure on ourselves.

However, there are other things you need to consider when thinking about having a guaranteed stop loss. For instance, perhaps you are using a forex strategy that is very dangerous and is always going to eventually cause high drawdowns. Martingale money management strategies and grid trading systems may be able to do well given the ideal market conditions, but they will usually end up causing a margin call and blowing up an account from my experience.

Guaranteed stop loss vs basic stop loss

A basic stop loss is an instruction to your forex broker to tell them that you want to close your position once it hits a specific price that is less favourable than the current market price. It can be a useful tool to limit your losses, but if slippage occurs or there are market gaps, then your order may not be carried out at the price you specified.

This is where guaranteed stops have an advantage. They work in the same way as basic stops, except that they will always be filled at the level you set, even if the market prices move rapidly which is quite common when trading forex.

Best forex brokers with a guaranteed stop loss

If you are looking for extra protection on your trades, please see a selection of our best forex brokers with a guaranteed stop loss below.

Broker
Rating
Regulated
Min. Deposit
Founded
Max. Leverage
1.
IG Review

ASIC, BaFin, CFTC, DFSA, FCA, FINMA, FMA, FSA, FSCA, JFSA, MAFF, MAS, METI, NFA

$250

1974

1:200

76% of retail investor accounts lose money when trading spread bets and CFDs with this provider.
2.
City Index Review

ASIC, FCA, MAS

$100

1983

1:200

Between 74-89% of retail investor accounts lose money when trading CFDs with this provider.
3.
Forex.com Review

ASIC, CIMA, CFTC, FCA, FSA, IIROC, JFSA, NFA, SFC

$100

2001

1:50

Between 74-89% of retail investor accounts lose money when trading CFDs with this provider.
4.
Oanda Review

CFTC, NFA

$0

1996

1:200

Leveraged trading in foreign currency contracts or other off-exchange products on margin carries a high level of risk and may not be suitable for everyone.
5.
XTB Review

CySEC, DFSA, FCA, FSCA, IFSC

$1

2004

1:500

Between 74-89% of retail investor accounts lose money when trading CFDs with this provider.
6.
eToro Review

ASIC, CySEC, FCA

$200

2006

1:30

68% of retail investor accounts lose money when trading CFDs with this provider.
7.
Plus500 Review

ASIC, CySEC, FCA, FSA, FSCA, FMA, ISA, MAS

$100

2008

1:30

79% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
8.
CMC Markets Review

ASIC, FCA, FMA, IIROC, MAS

$1

1989

1:500

Between 74-89% of retail investor accounts lose money when trading CFDs with this provider.
9.
easyMarkets Review

ASIC, BVIFSC, CySEC, FSA

$100

2001

1:400

Between 74-89% of retail investor accounts lose money when trading CFDs with this provider.
10.
Saxo Bank Review

ASIC, FCA, FINMA, JFSA, MAS, SFC

$500

1992

1:66

Between 74-89% of retail investor accounts lose money when trading CFDs with this provider.

Guaranteed stop loss pros & cons

Pros

  • Protection against unexpected market events
  • Can limit losses and risk exposure
  • Helps to develop a money management plan
  • Reduces drawdowns on the account
  • Can give traders peace of mind

Cons

  • Might exit a position prematurely
  • Some forex brokers may hunt stop losses
  • May not be as dynamic as a mental stop loss
  • Guaranteed stop-losses can cost a premium

Conclusion: are guaranteed stop losses important?

Yes, I think that if you are a conservative forex trader and can see the benefits of using a guaranteed stop loss rather than a traditional stop loss, then I would certainly be looking for a forex broker with guaranteed stop losses.

They can help to prevent excessive losses from factors that may be outside of your control. For example, the CHF/EUR peg crisis caused some brokers and traders to be wiped out when the Swiss National Bank shocked currency markets by scrapping the franc’s peg to the euro.

You can have the best forex trading strategy in the world and spend months or years building up your account. However, as shocking as it sounds, this could all be taken away without a guaranteed stop loss if a black swan event was to occur.

Of course, even with a guaranteed stop loss forex broker, you should always be aware of the significant risks involved with trading online and never risk more than you can afford to lose.


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