Investors can protect themselves in several ways by using limit orders and also stop orders. A limit order tells the firm you are dealing with to buy if the price declines to the amount you have specified. It will be acted on any time the price moves past the level of the limit order.

Stop orders are used to stop the investor from losing too much money if the price moves through the level specified. The investment will be sold preventing you from losing any further losses.

Each company may have slightly different guidelines they follow when a limit order or a stop order is triggered. It is important for you to take the time to understand these guidelines to ensure that you make the correct decisions relative to your orders to buy or sell. An example is when a investment moves through the stop order amount quickly, you may find that the price your investment is sold at may be worse than what you had asked it to be sold at, therefore causing larger losses than you had anticipated.

Many sites will also claim that your profits in spread betting are tax free since these are inherently bets on the direction a given investment will go, without having to actually purchase the stocks. Most of the sites also indicate that the tax laws can change, so you may find yourself with a tax bill sometime in the future. Check with the experts and gat professional advice concerning the tax laws as well as the risks associated with spread betting.