See todays blog entry entitled Guaranteed Stops – Should I use them? for more information about this forum topic.

Please add your thoughts or comments below.

_________________
May the markets be with you!

Harry,
The Spread betting beginner

In my view i should use them. It's right or wrong i don't know but guess of being alright.

I think that guaranteed stops have their place but the question is do the benefits outweigh the extra cost the spread betting companies charge? If you're only trading small stakes as you suggest you do in your post then not using them is most likely preferable to using them.

I have used guaranteed stops in the past however I have traded much larger stakes than the nominal £1 per point. My experience is that they are sometimes worth it and sometimes not and therefore the trades seem to balance themselves out. My personal preference is to trade with them as I'd rather have a guaranteed stop in place and not necessarily need it than need one when I don't have one.

Also my view on the wider stop is that the spread betting company is trying to tell us something here. Obviously they know what they are doing and therefore the minimum stop distance for guaranteed stops is most likely what they feel is the safest distance to avoid being stopped out. With a regular stop they don't care how close you place it because if the price falls to 0 before you get filled then you owe them money. However with a guaranteed stop you'd only owe them the amount to the stop, so they must be pretty sure that price is not going to fall to that level in a hurry.