Take profit and Stop loss

Take Profit & Stop Loss

1. What is Take Profit (TP) and Stop Loss (SL)?

1. Stop Order: Stop order is an algorithmic trading strategy with which traders may set a trigger price and an order price to limit losses and reduce risks. Orders will be placed automatically at the predefined order price once the market price reaches the predefined trigger price to "take profit" or "stop loss". With this strategy, traders may engage in momentum trading or limit their losses in a volatile market. Placing a stop order will freeze your margin or positions. You can place an OCO (One-Cancels-the-Other) order if you want to combine a stop order and a limit order. It only freezes your margin or positions for either the stop order or the limit order. When either one is triggered, the other order is automatically canceled. For stop orders, you can also choose to have either the last traded price, mark price, or index price as the trigger price.

2. Placing an order with Stop Order: When placing a limit order, advanced limit order, or market order, you can set up a stop order for the position to be opened. When the limit order is fully filled, the stop order will be placed automatically with the predefined trigger price and order price. Note: If the limit order is modified, the attached stop order will be removed. After the limit order is fully filled, the attached stop order can be found in "Open Orders — Stop Orders". It can be canceled at any time before it's triggered.

3. Position Stop Order: A position stop order refers to a stop order specifically placed for a certain position. Currently, you may set a fixed amount of TP/SL in a position. You can check and cancel the TP/SL orders in the "Open Orders".

2. How to take profit and stop loss?

Scenario 1 (Close a long position with a conditional order): A user holds a long BTC contract with an average open price of 9,000 USD and expects to close the long position to stop losses when the market price drops to 8,000 USD. He/she places a conditional order as shown below. Trigger Price: $8,000 Order Price: $7,950 (When selling out, it is preferable to set the order price not too close to the trigger price to ensure the order will be filled promptly. Choosing the market price is also recommended.) If the price falls to $8,000, the stop-loss order shall be triggered, and the user's long position will be closed at $7,950. If the order price is set as the market price, the position will be closed at the market price immediately. If the user wishes to close his/her long position and lock in his/her gains, he/she can set up a take-profit order and set the trigger price somewhere higher than $9,000.

Scenario 2 (Close a short position with a conditional order): A user holds a short BTC contract with an average open price of $9,000 and expects to close the short position to stop losses when the market price rises to $10,000. He/she places a conditional order as shown below. Trigger Price: $10,000 Order Price: $10,050 (When buying in, it is preferable to set the order price higher than the trigger price to ensure the order will be filled promptly. Choosing the market price is also recommended.) If the market price goes up to $10,000, the stop-loss order will be triggered and the user's short position will be closed at $10,050. If the order price is set as the market price, the position will be closed at the market price immediately. If the user wishes to close his/her short position and lock in his/her gains, he/she can set up a take-profit order and set the trigger price somewhere lower than $9,000.

Scenario 3 (Close a long position with an OCO order): A user holds a long BTC contract with an average open price of $9,000. He/she expects to take profits when the market price surges to $10,000 and to stop losses when the market price drops to $8,000. The user places an OCO order as shown below. TP Trigger Price: $10,000 TP Order Price: Market price or any price, e.g., $9,950 SL Trigger Price: $8,000 SL Order Price: Market price or any price, e.g., $7,950 TP will be triggered if BTC's market price goes up to $10,000 USD and the user can exit the trade at the market price instantly or at the preset TP order price, for example, $9,950. At the same time, the SL order will be canceled. SL will be triggered if BTC's market price drops to $8,000 and the user can exit the trade at the market price instantly or at the preset SL order price, for example, $7,950. Meanwhile, the TP order will be canceled.

Scenario 4 (Close a short position with an OCO order): A user holds a short BTC contract with an average open price of $9,000. He/she expects to take profits when the market price drops to $8,000 and to stop losses when the market price surges to $10,000. The user places an OCO order as shown below. TP Trigger Price: $8,000 TP Order Price: Market price or any price, e.g., $8,050 SL Trigger Price: $10,000 SL Order Price: Market price or any price, e.g., $10,050 TP will be triggered if BTC's market price drops to $8,000 USD and the user can exit the trade at the market price instantly or at the preset TP price, for example, $8,050. Meanwhile, the SL order will be canceled. SL will be triggered if BTC's market price rises to $8,000 and the user can exit the trade at the market price instantly or at the preset SL order price, for example, $10,050. Meanwhile, the TP order will be canceled.

Scenario 5 (Open a long position with a conditional order): BTC's current market price is at $11,500 USD and the user believes that the market will turn bullish if BTC's market price pushes through the $12,000 mark. He/she places a conditional order as shown below. Trigger Price: $12,000 Order Price: Market price or any price, e.g., $12,050 If BTC's price goes up to $12,000, a long order will be triggered and placed at its market price or the preset order price, for example, $12,050. OCO orders can also be placed for opening a long position. A bullish action will be triggered at the higher price while a reverse order will be triggered at the lower price.

Scenario 6 (Open a short position with a conditional order): BTC's current market price is at $6,500 and the user believes the market will turn bearish if BTC's market price falls through the $6,000 mark. He/she places a conditional order as shown below. Trigger Price: $6,000 Order Price: Market price or any price, e.g., $5,950 If BTC's price drops to $6,000, a short order will be triggered and placed at its market price or the preset order price, for example, $5,950. OCO orders can also be placed for opening a short position. A bearish action will be triggered at the lower price while a reverse order will be triggered at the higher price.

3. Stop Order Settings and Trigger Rules