What are turbos and how do you trade them?
Discover everything you need to know about turbos and the way they work. Plus, explore the unique benefits of Turbo24 – the world’s first 24-hour turbo – and learn how to trade it with IG.
To open an account, call +35 318 009 95362 or email newaccounts.uk@ig.com. We’re here for you 24 hours a day, from 8am on Saturday to 10pm on Friday.
Contact us +35 318 009 95362
Get info fast via our instant help and support portal. Available for account queries, ProRealTime, product info and more.
Visit help and support for more information.
Get info fast via our instant help and support portal. Available for account queries, ProRealTime, product info and more.
Visit help and support for more information.
Call +35 318 009 95362 or email helpdesk.uk@ig.com if you have any questions about trading or investing. We're available 24/7 between 8am Saturday and 10pm Friday.
Contact us +35 318 009 95362
To open an account, call +35 318 009 95362 or email newaccounts.uk@ig.com. We’re here for you 24 hours a day, from 8am on Saturday to 10pm on Friday.
Contact us +35 318 009 95362
Get info fast via our instant help and support portal. Available for account queries, ProRealTime, product info and more.
Visit help and support for more information.
Get info fast via our instant help and support portal. Available for account queries, ProRealTime, product info and more.
Visit help and support for more information.
Call +35 318 009 95362 or email helpdesk.uk@ig.com if you have any questions about trading or investing. We're available 24/7 between 8am Saturday and 10pm Friday.
Contact us +35 318 009 95362
Turbo warrants are complex financial instruments. Trading these financial instruments involves the high risk of losing money rapidly.
What are turbos?
Turbos – also known as turbo warrants or turbo certificates – are leveraged securities. A turbo’s price tracks an underlying financial asset’s one for one, and you can use a turbo to go long or short. As risk management each turbo trade has a built-in knock-out level and will terminate if this is hit.
Turbos are traded on venue rather than over the counter (OTC), and have fully visible order books that you can view to gauge sentiment and plan your strategy.
What is Turbo24?
Turbo24 is the world’s first 24-hour turbo warrant, offering you uninterrupted access to the financial markets from Monday to Friday - even when the underlying market is closed.1
Turbo24 is listed and traded on Spectrum, a multilateral trading facility (MTF). You can interact with the venue’s order book directly, giving you control over the price you pay for a Turbo24.
On this page, we’ll look primarily at Turbo24 trading with IG. Turbo warrants offered by other providers may differ in some ways.
When you trade Turbo24 with us, you’ll pay zero commission2 and you won’t be exposed to any currency risk because Turbo24 is traded in euros. Get started today by creating an account or experience this popular trading product first with our risk-free trading simulator.
How does turbo trading work?
- What are ‘long turbos’ and ‘short turbos’?
- What is leverage in turbo trading?
- How are turbos priced?
Turbo trading works by buying a transferrable security whose value is based on an underlying asset’s. So, you effectively take a position on that asset’s price either rising or falling.
For each trade, you choose a knock-out level – the point where you’d like to exit if the market turns against you. This then helps to determine the purchase price for the turbo, which will be your maximum possible loss. You’ll pay this outlay in full upfront.
That means you’re in control of your risk, and you’ll always know the most you stand to lose on each Turbo24 trade from the outset.
What are ‘long turbos’ and ‘short turbos’?
There are two types of turbos: long turbos, sometimes known as bull turbos, and short turbos, also known as bear turbos.
You’d buy a long turbo if you thought the price of the underlying asset was set to rise. With a long Turbo24, the knock-out level will be below the underlying asset’s current market price to protect you against downward movements.
Alternatively, you’d buy a short turbo if you thought the price of the underlying asset might fall. A short Turbo24 will have a knock-out level which is above the underlying asset’s current market price to protect you against upward movements.
What is leverage in turbo trading?
Trading with leverage means you only have to put up a fraction of the full cost of your position. Turbos are leveraged derivative products, so trading them is logistically simpler and costs far less than buying and selling the underlying asset directly. This means you can command larger positions, and any profits you make are amplified. However, it’s important to note that using leverage will also accelerate any losses you might incur.
By selecting your knock-out level, you control the price you pay for a turbo – and this in turn determines your total leverage. The lower the price of your turbo, the higher your leverage will be. You can see the leverage associated with each knock-out level clearly on our turbo trading platform.
How are turbos priced?
Turbos are priced based on the difference between the underlying market price and your selected knock-out level as well as other costs and adjustments.
As all potential costs are built into the price of a turbo, the initial outlay is all you’ll pay.² If you exit your trade the same day without being knocked out, you’ll receive this full amount back – plus or minus any profit or loss.
Additional costs will apply if you hold a position overnight; however, these are accounted for by a small adjustment to your knock-out level, so you won’t need to top up your account to maintain your trades.
Turbo trading example
Say you want to trade an underlying asset – such as Apple shares, the DAX or GBP/USD. The asset you choose is currently valued at €100 in the underlying market and you believe its price will rise, so you buy a long Turbo24.
You choose a knock-out level of €90 because the knock-out level must be below the current market price with long turbos. As a result, the price of the Turbo24 (excluding costs and other adjustments) is: 100 – 90 = €10. This is your initial outlay, and the most you could lose on the trade.
The closer your knock-out level is to the current price, the lower the price of your turbo and the higher the leverage. Greater leverage means that any movement in the underlying price – up or down – will amplify your profit or loss.
If the underlying asset rises by €10 to €110, that’s a 10% increase. Your turbo will track this price rise point for point, and its new value will be: 110 – 90 = €20. This gives you a 100% profit on your €10 outlay – ten times higher than you would have achieved by trading the underlying market directly.
But, if you thought the price was going to fall from €100, you’d buy a short turbo. Say you set your knock-out level at €110, since the knock-out level must be above the current market price with short turbos. The price of this turbo (excluding costs and other adjustments) is: 110 – 100 = €10.
Let’s suppose that despite your analysis, the underlying asset’s price increased by €10 to €110. Your short Turbo24 would be knocked out and you’d lose your €10 outlay – but nothing more, even if the market continued to rise.
Remember, you can manage your leverage and risk by selecting different knock-out levels for your turbo trades. However, keep in mind that choosing a knock-out level closer to the underlying market does increase your risk of being knocked out.
Why trade Turbo24 with us?
Trade 24 hours a day,1 commission-free2
Turbo24 is the only turbo that connects you to the markets 24 hours a day, Monday to Friday.1 Open, close and manage positions whenever the time is right for you – even when the underlying market is closed. And what’s more, you won’t pay any commission on your Turbo24 trades with us.2
Take advantage of rising and falling markets
You can use Turbo24 to speculate on the price of an underlying asset rising or falling, without having to own that asset outright. Go long or short on a range of key global markets, including equities, indices, forex pairs and commodities.
Put an absolute cap on your risk
Turbo24 has a built-in knock-out level, limiting your loss if the underlying asset’s price doesn’t move as you predicted.
When a knock-out level is reached, your position will terminate without a value and you’ll lose your initial outlay. But you’ll never lose more than that when trading Turbo24, even if the asset’s price moves rapidly through your knock-out level or gaps.
Recover from out-of-hours knock-outs
While you can trade Turbo24 around the clock,¹ you can’t be knocked out when the underlying market on which your turbo is based is closed.
If your knock-out level is hit out of hours, your Turbo24 will only terminate if the underlying market remains at or beyond this level when it re-opens. So, if the market has reversed before that time, your trade could stay active and might ultimately turn a profit.
Get the leverage you want with hourly
Turbo24 issues
Batches of turbos are issued every hour, meaning fresh securities quickly replace those that have been knocked out by market volatility. This unique feature means you can always find knock-out levels that are close to the underlying market price, offering low costs and high leverage.
Trade without currency risk
All of the Turbo24 markets we offer are priced in euros, which means that you don’t need to worry about converting any profits to your base currency. You also don’t need to think about exchange rate variability before opening a position.
Find liquidity
High market liquidity – the ease with which an asset can be bought or sold – increases the probability that your order will be filled at the price you want.
With us, you can trade a broad range of popular markets. And Turbo24 is listed on Spectrum – a venue specifically designed to offer liquidity to retail clients.
React faster with a tailored trading platform
Our intuitive platform is packed with features designed to make your turbo trading quick and seamless.
Leverage is always shown clearly, and you can simply click a knock-out level to trade directly from charts. Plus, our in-platform turbo calculator makes it easy to plan your trades. You’ll quickly be able to find the Turbo24 price equivalent to any underlying market level, so you can place a limit order at your target level.
If you’re not ready to trade the live markets, you can practise trading Turbo24 with €10,000 in virtual funds on our no-risk trading simulator.
Open a Turbo24 trading account
To trade turbos, you’ll need to open an account with a broker you can trust. We’re a world-leading online trading provider with over 45 years’ experience. What’s more, when you trade Turbo24 with us, you’ll pay zero commission² and get access to our superior turbo trading platform.
Why would you create an account with anyone else?
Choose your Turbo24 market and direction
Let’s say you expect the DAX to rise, so you buy a long turbo on the Germany 40 (as the DAX is called in our platform). You’ll find it in the ‘indices’ section. If you thought the DAX was going to fall, then you’d buy a short turbo instead.
You can see the knock-out levels and leverage ratios when you click either the ‘short’ or ‘long’ tabs to the right of the price chart.4
Select your order and expiry type
Choose from a range of market, limit and stop orders with different expiry options by expanding the selections.
Set your trade size and maximum risk
The trade size is the number of turbos that you’d like to buy. You can change it using the ‘size’ box in the order window. The total size of your position will determine the outlay (‘consideration’), which will be the maximum amount that you stand to lose.
In the example below, the cost to buy one long turbo on the Germany 40 is 0.983 and the total size selected is 1000 turbos. As a result, the total outlay – or ‘consideration’ – is €983.00 (0.983 x 1000), which represents the maximum risk.4
To confirm the details before you take a position, click on ‘preview order’.
Place your order and monitor your position
After you’ve followed the previous steps, and if you’re happy with the details of your position, place your order. You’ll need to monitor the market once you’ve placed your trade to ensure that it’s behaving in the way you anticipated.
You can manually exit your position to realise gains or restrict losses whenever you like. However, if the market moves against you and hits your knock-out level, your position will terminate automatically to protect you from further loss.
FAQs
What is the definition of turbos in finance?
Turbos – sometimes called turbo warrants or turbo certificates – are venue-traded securities that track the price movements of an underlying asset one for one. They’re traded with leverage, and you can use them to speculate on an asset’s price falling as well as rising. Turbos have a knock-out level that you select, and they’ll terminate if this level is reached.
What is the difference between turbos and CFDs?
The differences between turbos and CFDs are as follows:
- Both products enable you to take a position on an underlying financial market with leverage; however, turbos enable you to control the level of leverage and risk on each trade
- Turbos have limited risk due to their built-in knock-out level. Your maximum loss is your initial outlay. To trade CFDs with limited risk, you must attach a guaranteed stop to each position. However, you can amend this later – unlike the knock-out level on a turbo, which is fixed. Stops are also available on Turbo24; however, they’re not guaranteed and may be subject to slippage
- With turbos, knock-outs are based on the underlying market price. This means you can’t be knocked out while the underlying market is closed, yet you can continue trading during this time
- While CFDs are traded over the counter (OTC), turbos are traded on venue and can generally only be bought via a broker or bank. As listed securities, turbos offer non-discretionary price formation and pre-trade visibility. They may also provide opportunities to get better prices by trading against other retail traders or inside the market maker’s spread
How does Turbo24 differ from open end turbos, mini futures and covered warrants?
Turbo24 is very similar to open end turbos and mini futures. All three have no fixed expiry and built-in knock-out or stop-loss levels to protect you against adverse market movements. They can also all be used to go long or short on an underlying asset, meaning you can use them to profit in rising or falling markets.
Covered warrants, on the other hand, are similar to call or put options in that they give the holder the right – but not the obligation – to buy or sell an underlying asset at a specific price on or before a predetermined date in the future.
What platforms can I use to trade turbos?
You can trade turbos on our web-based trading platform and our mobile trading apps – all of which are optimised for turbo trading. You’ll be able to trade directly from charts, interact with the Turbo24 order book in our transparent deal ticket and view live market analysis. Leverage is shown clearly, and our in-platform turbo calculator makes it easy to find the equivalent turbo price for your target underlying market level.
You can also use our trading simulator to trade with €10,000 in virtual funds. With the simulator, you’ll be able to get a feel for how our turbo platform works in a completely risk-free environment.
How much does it cost to trade turbos?
There’s no commission on Turbo24.2 Plus, because all potential fees are inherent in the Turbo24 price, the initial outlay is all you’ll pay.3
The cost of overnight funding is accounted for by a small daily adjustment to your knock-out level. See our product details for full information.
On a long Turbo24, this will result in your knock-out level moving upwards over time, and on a short Turbo24, it will move downwards.
How is turbos trading taxed?
All gains from turbo trades are subject to tax.
What markets can I trade with turbos?
We offer a wide range of popular and liquid turbos markets, namely:
- Top [nationality] equities along with big international names like Apple, Amazon and Google
- A range of key forex pairs, including EUR/USD, GBP/USD, AUD/USD and EUR/JPY
- European indices such as the France 40, Italy 40 and Germany 40, plus Wall Street and more
- Three frequently traded commodities: Gold, Brent Crude and US Light Crude
Can I go long and short with turbos?
You can go either long or short with a turbo.
To go long and speculate on a market rising, you’d buy a ‘long turbo’. To go short and speculate on a market falling, you’d buy a ‘short turbo’.
What order and expiry types are available on Turbo24?
You can choose from the following:
| Order type | Expiry type |
|---|---|
| Market | Execute and eliminate |
| Limit | Good for the day |
| Stop market | Good for the day |
| Stop limit | Good for the day |
You’ll see a brief explanation of each order and expiry type in the deal ticket.
1 All turbos can be traded 24/5, except for equities and some indices (such as HS50) that follow the trading hours of their reference exchange(s). More info here.
2 All trades with a notional value of above €300 are commission-free.
3 Turbo24 trades based on underlying assets listed in Italy are subject to the Tobin tax.
4 The examples in this section are based on real data taken from our platform on 27 February 2020. Please note that fees and spreads are variable, and may differ significantly from those illustrated here. The multiplier for each market can be found in our product details.
