A stop loss and a take-profit limit are the two orders that actually enforce your risk management plan once a trade is live — everything else is preparation, these are execution. Understanding exactly what each order type does, and where the differences matter, is fundamental.
Standard Stop Loss
What it does
Closes your position automatically once the market reaches your chosen price — but executes at the next available price, not guaranteed to be exactly your chosen level. In fast-moving or gapping markets, this can mean a worse fill than intended.
Guaranteed Stop
What it does
Closes your position at exactly the price you specify, regardless of how far the market gaps, for a small additional premium. This matters most around events that can cause a genuine price gap — earnings announcements being the clearest example.
We've covered guaranteed stops around earnings specifically — including why the minimum allowable distance widens considerably around those events — in a separate post.
→ Using the Economic Calendar: Timing, Earnings, and Protecting Open Trades
Trailing Stop
What it does
A stop that automatically moves in your favour as the trade becomes more profitable, staying a fixed distance behind the current price — but it never moves backward against you. This lets a winning trade run further while progressively locking in more of the gain, without you having to manually adjust the stop yourself.
Illustrative example
Illustrative example only — actual trailing stop behaviour and minimum distances vary by market; always check current terms on the IG platform.
Take-Profit Limit
What it does
Closes your position automatically once your target price is reached, securing the gain without you needing to watch the trade or make a real-time decision. This is what lets a genuine target — set at a real technical level, not an arbitrary number — actually get honoured, rather than second-guessed in the moment.
Why This Connects Back to the Formula
Every stop and target should be set from your Position Sizer output, based on genuine technical levels — not adjusted afterward based on how the trade feels. The order types above are the mechanism; the discipline to actually use them correctly, and leave them alone once set, is what the Trader's Edge Formula is built to reinforce.
Further reading: IG Academy has free structured courses covering order types and trade execution in more depth.
Set Every Stop and Target From a Calculated Plan
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Risk Warning: Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading spread bets and CFDs with IG. Guaranteed stops carry an additional premium. Standard stops and trailing stops do not guarantee execution at your specified price in fast-moving or gapping markets.