UK Brokers With Guaranteed Stop Loss Orders (GSLOs)

Brokers with guaranteed stop loss orders provide a beginner-friendly risk management tool. For a premium, investors can specify a price at which a trade will be closed, regardless of volatility and slippage. In this tutorial, we explain how a guaranteed stop loss works with a detailed example. We also look at their pros and cons, conditions, and list the top UK brokers with guaranteed stop loss orders in 2024.

How A Guaranteed Stop Loss Works

A guaranteed stop loss order (GSLO) is a common risk management tool offered by leading trading brokers. Most platforms allow traders to set up a regular stop loss to limit losses if the market moves against them. However in highly volatile markets, prices can swing substantially, causing a discrepancy between the price the trade was requested and the price at which it is executed. This is known as slippage or gapping.

Fortunately, brokers with guaranteed stop loss orders offer a solution. For a fee, traders can specify a price at which a trade will be executed, regardless of any slippage. So GSLOs help traders limit risk exposure when trading in volatile markets, such as commodities, forex or cryptocurrencies.

Example

Let’s assume you want to go long on Barclays stock (BARC), which is currently valued at £165.00.

You buy 100 shares and intend to hold the position for several days. Your total position size is £16,500 (100 x £165).

However, from your research, you believe that market developments may lead to a period of significant volatility, which could result in slippage. With this in mind, you set a guaranteed stop loss order at £160.00 to limit your potential losses.

The GSLO fee is calculated as the premium rate x number of units, which in this case, is £2 x 100 = £200.

Following unexpected geopolitical events and a bleak economic outlook, the value of Barclays stock suddenly falls to £155.00.

Using a regular stop loss, the trade would be closed at the new price (£155), meaning a loss of £1000 (£16,500 – (100 x £155)).

However, with a guaranteed stop loss, the trade would have been closed at £160, meaning a loss of £300 (£16,500 – (100 x £160) – £200)).

Note, most brokers with guaranteed stop loss orders only charge a fee if the GSLO is actually triggered.

How To Set Up A Guaranteed Stop Loss

When setting up a regular stop loss on a trading platform, many brokers make it easy to upgrade it to a guaranteed stop loss. At CMC Markets, for example, in the order settings window, clients can choose the type of stop loss order from a drop-down list.

Traders can then set the distance/level of the guaranteed stop loss. This is normally displayed in pips/points or a percentage. There is also usually a minimum distance from the existing market price that the GSLO can be set.

Importantly, guaranteed stop losses can only be set during trading hours. With that said, you may be able to move the GSLO further away from the current market price outside of standard trading hours.

Setting Up A GSLO On CMC Markets

Setting Up Notes & Tips:

• Most brokers do not let you apply a GSLO to an existing/open position
• The GLSO premium is usually displayed on the order screen and is not charged unless it is triggered
• Make sure you have enough capital in your account to cover any increase in margin exposure if you modify your guaranteed stop loss

Advantages & Disadvantages Of Guaranteed Stop Losses

Pros

• Easy to understand and use
• Limits losses in volatile markets
• Protects against slippage and gapping
• Beginner-friendly risk management tool
• There is a long list of UK-regulated brokers with stop loss orders
• The GSLO premium is normally only charged if the stop loss is triggered

Cons

• Brokers usually charge a fee, known as the GSLO premium
• In many cases, regular stop losses will suffice, which are also cheaper

How To Choose Brokers With Guaranteed Stop Losses

Whilst guaranteed stop loss orders are a useful risk management tool, they are not the only option or consideration when choosing an online brokerage. Also look at the following:

Trading Platform

One of the most important factors is the platform(s) a broker offers. This is the interface investors use to navigate the markets, manage their trades, and control their accounts. Some of the most popular options are MetaTrader 4 (MT4) and MetaTrader 5 (MT5), though many brokers with guaranteed stop loss orders also offer a proprietary terminal.

A useful tip is to open a free demo account to test a broker’s platform before committing capital. You can also use a paper trading profile to explore a firm’s suite of risk management alerts and tools.

Fees & Charges

Brokers will have different GSLO premium rates. The fee can vary depending on the market, for example, forex vs commodities vs cryptocurrencies. It’s also worth comparing any spreads, commissions, hedge and overnight fees. In addition, there may be bank deposit and withdrawal charges to factor in. Finally, some brokers offer premium analysis tools and pattern recognition technology in return for a fee.

Consider the full list of trading and non-trading fees to find the best low-cost provider.

Education & Research

For beginners, in particular, it can be worth signing up with a brokerage that offers a good selection of educational materials. Some firms offer dedicated training academies for novice investors. Topics can include how to use risk management tools, such as guaranteed stop loss orders, plus insights into specific markets.

Social trading tools can also be an effective way to learn from seasoned investors.

Assets & Products

Brokers with guaranteed stop loss orders offer access to different markets and products. Do you want to speculate on the LSE or FTSE? Perhaps you want to take positions on foreign stocks listed on the NYSE or NASDAQ? Some firms also specialise in forex trading, offering a long list of currency pairs with the GBP.

Note, most UK-regulated brokers cap leverage to 1:30 on derivatives like CFDs.

Bottom Line On Brokers With Guaranteed Stop Loss

Brokers with guaranteed stop loss offer a user-friendly risk management tool that can protect traders from large losses in highly volatile markets. A GSLO essentially protects against slippage, ensuring a trade will always be executed at the pre-determined price. Some platforms charge when you open a guaranteed stop loss order, but many brokers only charge if the GSLO is triggered. Use our guide above to add a guaranteed stop loss to your next trade.

See our list of the best UK brokers with guaranteed stop loss orders to start trading.

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