Knock-outs trading
Capped risk; unlimited profit potential. Trade global markets with knock-outs - whether you're bullish or bearish.
How do knock-outs work?
Why trade knock-outs?
How to place a knock-out trade
How do knock-outs work?
Knock-outs are a limited-risk product with an expiry. They move one-for-one with the underlying price1, and close automatically if your chosen knock-out level is hit. By choosing your knock-out level and your trade size, you can manage your maximum risk for each trade.
You can trade knock-outs whether you think the market will rise or fall – buying a bull knock-out means you think the market will rise, and a bear knock-out trade means you think it will fall. You can close your position at any time before expiry - unless the knock-out level is reached, in which case the position will be automatically closed.
Why trade knock-outs?
Limited risk
Lock in your maximum loss in advance
Flexible margin
Your total margin is equal to your total risk multiplied by 1.12
Reasonable cost
Premium gets refunded if the trade isn't knocked out
US Tech 100 knock-out example
Considering the diagram above, this is how you would calculate your total margin:
(Entry price - knock-out level + premium) x value per point x 1.1 = margin required.
In this example, your margin would be: (12000.8 - 11800 + 2) x $1 x 1.1 = $223.08.
Remember, if you decide to close a trade before it's knocked out or if your stop-loss or limit levels are reached, the knock-out premium will be refunded.
How to place a knock-out trade
Set up your knock-outs on mobile
On iOS (iPhone, iPad)
1. After logging in, click on 'knock-outs' under the 'markets' tab
2. Select the underlying market you'd like to trade
3. Choose between a 'bull' or 'bear' contract based on your directional bias
4. Click on 'trade bull' or 'trade bear' (depending on the chosen direction) to open the deal ticket
5. Indicate a knock-out level and position size of your trade
6. Input your preferred stop distance and limit distance (optional). Click on the 'place deal' button to open the trade
On Android
1. After logging in, under the 'markets' tab, click on the search icon on the top right-hand side of the screen
2. Click on knock-outs and select the asset class and then the underlying market you would like to trade
3. Select either the 'bull' or 'bear' market from two options, depending on your directional bias
4. Click on either the 'trade bull' or 'trade bear' button, or switch to the 'new deal' tab to open a ticket
5. Indicate a knock-out level and determine your position size
6. Input your preferred stop loss and/or limit distance (optional). Upon confirming all fields, click on the 'place deal' button
How much do knock-outs cost?
The opening price of a knock-out is the difference between IG’s underlying price at which you open your position and the knock-out level you select. A small knock-out premium is included in our spread, which means you’ll receive it back if you close the trade without being knocked out.
Get full product details on the cost of knock-outs, including spreads and funding charges, by following the link below.
On which markets can I trade knock-outs?
IG offers this product across a range of popular markets, available 24 hours a day, including:
Major forex pairs
Global stock indices
Commodities
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1 This is not the case when the knock-out premium changes. If the knock-out premium changes, the price of the knock-out will move by the amount the premium changes.
2 Margin requirement computation to comply with regulations.
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