What Is Stop Loss Order and Stop Limit Order in CFD Trading?

Stop loss order and stop limit order are commonly used by CFD traders in managing their risks in trading.

• Question 01

  What is the primary purpose of using stop loss and stop limit orders in CFD trading?

  Your Answer

  • A.To amplify losses

  • B.To automatically close a position at a certain price

  • C.To increase leverage

  • D.To initiate new trades

• Question 01

  How does a stop limit order differ from a stop loss order?

  Your Answer

  • A.Stop limit orders are used for buying, while stop loss orders are for selling.

  • B.Stop limit orders only trigger at market open, while stop loss orders trigger at any time.

  • C.Stop limit orders allow for better prices, while stop loss orders trigger at the specified price or worse.

  • D.Stop limit orders and stop loss orders are interchangeable terms.

• Question 01

  Why might traders use technical analysis to determine stop-loss levels?

  Your Answer

  • A.To maximize profits

  • B.To minimize transaction costs

  • C.To automate trading strategies

  • D.To identify key support and resistance levels

• Question 01

  When you place a stop-limit order in CFD trading, what are the two specified prices?

  Your Answer

  • A.Entry price and exit price

  • B.Limit price and market price

  • C.Stop price and limit price

  • D.Market price and stop price

• Question 01

  If the market price gaps down below the limit price in a stop-limit sell order, what happens?

  Your Answer

  • A.The order will be executed at the market price.

  • B.The order will not be executed at all.

  • C.The order will be executed at the stop price.

  • D.The order will be canceled automatically.

• Question 01

  What factor determines whether a stop-limit order will be executed in CFD trading?

  Your Answer

  • A.The order size

  • B.The willingness of a buyer or seller at the limit price or better

  • C.The market volatility

  • D.The entry price of the CFD

• Question 01

  In CFD trading, when are the order trigger and execution at specified price levels expected to occur?

  Your Answer

  • A.After opening a trading account

  • B.After deciding on a trading strategy

  • C.After entering the order details

  • D.After placing the order