While contracts for difference (CFDs) can be a great addition to your overall investment strategy, you could lose more money than you started with. To protect you from losing more money than you have, some CFD providers offer limited risk accounts. In this video, Simon Brown explains how these accounts limit how many times you can gear your portfolio to protect you from losing more money than the deposit you paid to open the position. He also explains how compulsory guaranteed stop losses will get you out of a position before your account goes negative.
Limited risk accounts are a way to learn the ropes of derivatives trading in a financially responsible way. Once you feel comfortable with how CFDs work, understand the risks and the costs involved, you can apply for an ordinary CFD account.
Another way to manage risk in your trading portfolio is to ensure that you have a well thought-out trading plan and risk management strategy. Watch our Boot Camp series for practical tips on implementing a trading strategy.
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