In an ideal world I recommend watching your trades as closely as possible, especially if you are new to trading. However, we do live in the real world and this is not always practical. Luckily there are processes in place that will allow you to manage your trades in an effective manner.

If you are looking to set an entry point into a market then one of the most useful options is the ability to set what is known as an ‘order to open’. This effectively allows a trade to be opened when a chosen market reaches a desired level in a particular market. When a trade is open you can keep your potential losses to an acceptable level by setting a ‘Stop’. For example: The FTSE, Daily is being quoted at 6020-6022 you choose to buy at 6022, but set a ‘Stop’ at 6005. This means that if the market falls you will be closed out at that level, limiting potential losses to 17 points.

You may also put a ‘limit order’ in place. This works the opposite way to a ‘Stop’ by allowing you to close out a trade if you make a certain amount of profit. It’s worth noting that this is one instance where it is possible to benefit from gapping in the market, as many firms will close positions higher than the level originally specified. Although these are all tools that can be very useful, it is always considered to be a good idea to monitor positions as closely as you can. Free ‘Stops’ do not legislate for gapping in the market and a higher price is paid to guarantee specified levels.

When looking at your open positions for the first time it is worth remembering that the current position is calculated on the mid-point of the current quote. As you have paid the cost of the spread to enter the market it will look as if you have made a loss already, even if the price hasn’t moved!