cfd's any traps i should know?, page-5

Some very important traps to be aware of are around the use od stop losses (in relation to CMC and may or may not apply to other providers)

When placing a stop order for share CFDs ensure the quantity is the same as your holding. When placing an order with CMC a default quantity is displayed and will revert back to the defualt amount each time you change the type of order you are placing. If your stop order is for a larger quantity than you are holding, the order will be cancelled by the system and your stop will not be executed.

When trading index, currency and other CFDs this does not apply. A stop loss order will be executed regardless of the size of a current open position or even if no current open position exists. Therefore you can enter a position, place a stop loss and if you close the open position without cancelling the stop loss order you run the risk of a position being opened again if that price of your stop loss is hit.

ADVICE

CHECK ALL PENDDING ORDERS ON A DAILY BASIS TO ENSURE STOPS ARE AT THE CORRECT PRICE, FOR THE CORRECT QUANTITY AND THAT THE STOPS FOR ALL CLOSED POSITIONS ARE CANCELLED

A simple typo or forgetting to cancel an order can cost big money very quickly