Trading Spreads

A limit order is an instruction to the spread betting firm to buy or sell an instrument at a specific price. Limit orders are used to achieve a more favourable price. Limit orders can be set to open a trade when the market reaches a certain level. For example if the ftse is at 4900 you can set a limit order to buy at 4950. If the ftse reaches 4950 a position will automatically be opened.

A limit order can also be used to close a trade once a certain price has been achieved. This allows a position to be closed once a certain profit level has been reached. For example if you buy the ftse at 4900 a limit order can be set to sell if the price reaches 4950.

The risk with limit orders is that the trigger price may never be reached meaning a trade may never be opened or closed by the order. The limit order is a very useful tool for maximising profit, it allows positions to be opened at the best market price should it become available.