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The Financial Spread Betting Handbook: The definitive guide to making money trading spread bets by Malcolm Pryor

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9. Keeping Losses Small – The Stop Loss

In this chapter we take a good look at the stop loss.

Cart before the horse?

We haven’t even placed a bet yet, and here we are about to discuss one way of exiting them! But for many losing spread bettors the two following simple rules could improve their performance significantly:

  • Rule One: Always determine before you place your bet the point at which you will exit the bet if it goes against you.
  • Rule Two: See Rule One.

But there’s no such thing as a free lunch. In spread betting there are often trade offs. Potential advantages are often partially offset by potential disadvantages. This is particularly noticeable as we look at the stop loss.

Stop or no stop?

Let’s address the basic question ...

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