Understanding GSLOs and how they can enable you in your trading journeys.

Markets are dynamic, and staying ahead of the curve means understanding trading instruments and how they offer a crucial shield against financial uncertainty.

In today's fast-paced financial landscape, the term "market volatility" has become a constant companion for traders worldwide. From shifting inflation dynamics and central bank interest rate decisions to ongoing geopolitical developments and technological disruptions, the markets are a constant ebb and flow of unpredictable events.

For traders, this translates into increased risk exposure and, quite understandably, heightened anxiety about potential losses.

At OANDA, we understand that successful trading isn't just about identifying opportunities; it's fundamentally about robust risk management. That’s why we empower our clients with sophisticated tools designed to help them navigate these choppy waters.

One such essential tool is the Guaranteed Stop Loss Order (GSLO) – a critical component of any well-rounded trading strategy, especially when faced with sudden market movements.

A GSLO is a unique type of exit order that offers protection against market gapping and slippage. Unlike a standard stop-loss order, which might execute at a different, less favourable price during periods of extreme volatility or when markets open with a significant gap, a GSLO ensures your trade is closed at the exact price you specify.

Imagine a scenario: you have an open position, and overnight, a major news event causes the market to "gap" – prices jump from one level to another without trading at any prices in between. With a standard stop loss, your order might only be filled at the new, unfavourable market price (see Figure 1). A GSLO, however, acts as a commitment: it will always be executed at your predetermined GSLO level, safeguarding your capital from unexpected, sharp movements (see Figure 2).

The current market environment, characterised by rapid shifts and elevated uncertainty, makes the benefits of GSLOs more pertinent than ever for forex CFDs, indices CFDs, silver CFDs, oil CFDs, and gold CFDs traders.

Here’s how GSLOs offer a human touch to your trading strategy:

• Price Certainty: In an era where news travels at lightning speed and markets react instantly, knowing your absolute maximum loss on a trade provides immense peace of mind. GSLOs eliminate the worry of "black swan" events or sudden overnight shocks leading to losses far beyond your intended limit. This certainty allows you to focus on your analysis and strategy, rather than constantly fearing the unexpected.
• Margin relief: Another significant advantage of utilising GSLOs, particularly beneficial in volatile periods, is their potential to offer margin relief. When a position is protected by a GSLO, your margin requirement can be substantially reduced, often limited to the amount of capital truly at risk, plus a small buffer and associated fees. This means more of your capital remains available, potentially allowing for greater flexibility and better resource allocation across your portfolio.

As a globally regulated broker, OANDA adheres to stringent financial oversight standards, including those set by the Monetary Authority of Singapore (MAS). While MAS mandates robust risk management frameworks, clear disclosures, and strong investor protection for financial institutions, it's important to note that MAS does not specifically mandate brokers to offer GSLOs.

However, by offering tools like GSLOs, OANDA aligns with the spirit of MAS's regulations, empowering traders with effective mechanisms to manage their exposure and make informed decisions in the volatile financial markets. Our commitment to providing sophisticated risk management solutions underscores our dedication to your trading security and success.

Implementing a GSLO with OANDA is straightforward.

• You can apply GSLOs to your positions on various popular instruments, including CFDs on indices, gold, and forex.
• When placing aGSLO, remember it must be set at a minimum distance away from your entry price. During market hours, you can place or modify a GSLO as long as it continues to meet the minimum distance criteria and your margin requirements.Outside of market hours, you can only move an existing GSLO further away from the current market price. A premium is charged if a GSLO is triggered.

Ready to enhance your trading security? Explore how GSLOs can fit into your strategy and provide greater peace of mind during market volatility.

Learn more about Guaranteed Stop Loss Orders on OANDA's platform today.