MARKETS.COM, operated by Safecap Investments Limited, has activated a new risk management tool for all French clients, in accordance with the latest AMF Regulations. This involves the Guaranteed Stop Loss (GSL) functionality, which will be embedded in every new trading position opened.
What is Guaranteed Stop Loss (GSL)?
The Guaranteed Stop-Loss (GSL) works similarly to the Stop-Loss Order, with the main difference being that the GSL is immune to price gapping or market volatility.
With MARKETS.COM the GSL will be automatically set to the level of the initial margin used while opening the position.
Advantages of Guaranteed Stop Loss (GSL) with MARKETS.COM
- Useful in extremely volatile markets, price slippage and market gapping.
- You do not risk more than your initial investment.
- The maximum risk per position is known in advance.
- Reduces the need to monitor your position at all times.
Even with a GSL attached to your position, you can still set a Stop Loss and/or Take Profit, as described in our Order Execution Policy. In the event of Price Slippage or market gapping, such orders are not guaranteed to take effect at the price for which they are set. In such cases however, the loss will be strictly limited up to the amount of GSL.
Example of Guaranteed Stop Loss (GSL)
The current market price of EUR/USD is currently quoting at 1.18480/1.18500 and you decide to go long 1,000 units at 1.18500. The initial margin requirement for opening the position is 11.85 USD. The system will therefore attach to your position a GSL at the same level of 11.85 USD.
Let’s say now that due to a major news announcement, the price of EURUSD suddenly drops to 1.17100. Since your position has a GSL attached, your positions will be closed with a loss of 11.85 USD.
If the GSL was not attached to your position, your trade would have closed at the next available price of 1.17100 which would result in a loss of 14 USD [(1.17100 – 1.18500)*1,000].