Why use stop losses in financial spread betting?

I am going to start by saying I’m not going to apologise for the length of this post about stop losses. A stop loss in financial spread betting is crucial.

I can’t understand why any trader would be against the use of stop losses. A stop loss is a tool that you can use to your advantage. It is your friend... it will look out for you if the market turns against you or heavens forbid... you make a wrong call!

There are successful spread bettors who don’t have stop losses but investors are different to traders. I am assuming that you are financial spread betting because you are trading for the short and medium term.

Investors may say they can afford to wait for the price to recover but I don’t want to.

If I haven’t made my position clear let me try to one more time...

A stop loss in financial spread betting is an absolute MUST!

As traders, we get things wrong and that is something we have to accept. Even the best traders are often wrong more than they are right. The key to financial spread betting is cutting you losses quickly and letting your profits run.

Stop losses keep you under control. When you are financial spread betting you are using leveraged products and things can go wrong very quickly. That is not to say that you are 100% covered with stop losses but it will go a long way in protecting you.