This feature allows you to set a specific rate (price) at which your position will close, in case the price moves against you, in order to minimise your loss. Once this rate is reached or passed (as sometimes the price can ‘gap’ and move past the designated level), the Stop Order will be triggered and your position will be automatically closed. This feature is free of charge.
There is no guarantee your position will close at the exact price level you have specified, because of ‘slippage’. Slippage can occur due to volatile price movements. When the market reaches or surpasses the specific price you set for the position to close, the position will close at the next available price.
For example: Alphabet’s Buy/Sell rates are $500/$498.
You buy 10 shares CFDs of Alphabet and set a Stop Loss at the Sell rate of $450.
If Alphabet’s price suddenly drops from $498 to $400, the trade will close at $400 instead of $450, which was the Stop Loss level you initially set. Since the Stop is not guaranteed, when the market suddenly dropped and passed $450, the position was triggered to close at the next best available price which was $400.
Remember that CFDs are a leveraged product and can result in the loss of your entire capital. Please ensure you fully understand the risks involved.