Prerequisites: Condition List
Understanding the conditional order helps to understand the take profit and stop loss order!
What is a Take Profit and Stop Loss order?
A stop-profit and stop-loss order refers to: setting the trigger price and order parameters in advance, where the trigger price is the precondition for placing an order, generally the target stop-profit and stop-loss position. When the latest transaction price of the market reaches the trigger price, The system will place an order according to the order parameters set by the user to close the position to preserve profits or reduce losses.
According to the different types of orders executed after the take-profit and stop-loss orders are triggered, the take-profit and stop-loss orders are divided into:
Limit take profit stop loss
Market Take Profit Stop Loss
Limit take profit stop loss
Limit, take profit and stop loss need to set the following parameters:
1
trigger price
2
Order price
3
number of orders
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After the limit price, take profit and stop loss are triggered, a limit order will be placed. The limit order specifies the highest price that the user is willing to buy or the lowest price that the user is willing to sell. After the user sets the limit price, the market will give priority to the transaction at the price in the favorable direction, which means that the limit order may not be filled immediately.
Advantages of Limit Take Profit and Stop Loss
After triggering, it can ensure that the transaction price is within the limit price, and the slippage is controllable.
Disadvantages of Limit Take Profit and Stop Loss
Not necessarily a deal.
*skills
In order to improve the probability of closing the price limit, take profit and stop loss, we generally do not set the order price and the trigger price to be the same, but reserve a part of the slippage area. For example: Take profit for a long position, the trigger price is $60,000, and the order price can be set to $59,900, because a short order of $59,900 is easier to fill in the market of $60,000!
*Case
See the "Cases" section of the article
Market Take Profit Stop Loss
Market take profit and stop loss need to set the following parameters:
1
trigger price
2
number of orders
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After the market price take profit and stop loss are triggered, a market price order will be placed, and the market price order will be placed at the best price of the market at that time, helping users to quickly trade.
Market Take Profit and Stop Loss Advantages
Can be traded immediately after triggering.
Market Take Profit and Stop Loss Disadvantages
The transaction price cannot be guaranteed, and a large position or in a market with poor liquidity may cause a large slippage.
*Case
See the "Cases" section of the article
Summarize
Limit/market prices each have their pros and cons. Follow the suggestions below to get a better take-profit and stop-loss effect:
Take profit and choose limit price, which can guarantee profit;
Stop loss and choose the market price, which can be quickly traded;
Select the market price for small positions;
For large positions, choose the limit price or the market price to take profit and stop loss in batches;
illiquid markets choose limit prices;
Execution logic of take profit and stop loss orders
The main parameters of the take profit and stop loss order are:
1
position
2
trigger price
3
Order price/market price
4
number of orders
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The life cycle of a Take Profit and Stop Loss order is divided into:
1
1. To be triggered
2
2. Trigger success/trigger failure
3
3. Place an order after the trigger is successful
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1. To be triggered
After a Take Profit and Stop Loss order is successfully submitted, the Take Profit and Stop Loss order is in the state of "to be triggered"! Take Profit and Stop Loss orders in this state will be displayed in the [Plan Order List]. The take profit and stop loss order is a closing order, so the direction of the take profit and stop loss order for long positions is 'sell to close long', and the direction of take profit and stop loss order for short positions is 'buy to close short'.
*Each plan order is like a mechanism that can only be triggered once. When the market price reaches the trigger price, the mechanism will be triggered.
*Each Take Profit and Stop Loss order has an expiration date, the default is 14 days, and the user can change it in [Trade Settings]. After the expiration date, if the TP/SL order has not been triggered, it will be cancelled!
2. Trigger the rule
When the latest transaction price of the market meets the following conditions, the Take Profit and Stop Loss order will be triggered.
Take Profit
stop loss
Long position (sell to close long)
Last traded price >= trigger price
latest transaction price <= trigger price & | latest transaction price - mark price | / mark price < anti-pinning threshold
Short position (buy to close)
Last traded price <= trigger price
latest transaction price >= trigger price & | latest transaction price - mark price | / mark price < anti-pinning threshold
*Stop loss prevention pin mechanism
In an illiquid market, market transactions may cause pin insertion, which is unfavorable for stop-loss orders. In this regard, we have added a stop loss prevention pin mechanism. In the market, the marked price is not affected by pins. When the latest transaction price deviates from the marked price by more than 10%, it can be determined as a pin. These transactions that deviate too much will not trigger stop-loss orders.
1
Pin determination rules: |Latest transaction price-marked price| / marked price> anti-pinning threshold
2
Anti-Pin Threshold = 10%
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caution: 1. The take profit order is not protected by this, because the market position when the pin is inserted may be beneficial to the take profit. 2. The pins within 10% are not protected, because the price deviation within 10% is likely to be normal and does not belong to the pins.
*Being taken over by the forced liquidation causes the trigger to fail
When the market fluctuates violently and the stop loss price is close to the liquidation price, although the above triggering rules are met, the position is likely to have been/is being taken over by the liquidation engine at the time of triggering, which will cause the trigger to fail!
3. Place an order after triggering
When the Take Profit and Stop Loss is triggered, the system will immediately submit the order to the market according to the order parameters. The delegate parameters are as follows:
1
Order direction: closing direction (the opposite direction of the position)
2
Order price: limit price, take profit and stop loss are the 'order price'; market price, take profit and stop loss are the market price
3
Order quantity: Min (the number of positions that can be closed at the time of triggering, the 'order quantity' in the take profit and stop loss order)
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At this time, you can see the order in the [Current Order List] or [Historical Order List].
*Can be aligned with the number of flat
The user may manually place a closing order to close the position after setting the take profit and stop loss. When the position has a closing order, the take profit and stop loss can only trigger the remaining part that can be closed!
case
Limit and Take Profit Scenario
On March 5, 2021, BTC strongly exceeded 50,000 US dollars. I chased up and opened a long position of 10 BTC, and the opening price was 50,000 US dollars. My target take profit position is $60,000. I am more used to taking profit in batches, so I set a take profit order at $58,000 and $60,000 respectively. The parameters are as follows:
Take Profit Order 1
1
Trigger price: 58000 USDT
2
Order price: 57900 USDT
3
Order Amount: 5 BTC
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Take Profit Order 2
1
Trigger price: 60000 USDT
2
Order price: 60000 USDT
3
Order Amount: 5 BTC
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Afterwards, BTC continued to rise strongly as I wished, breaking through US$58,000 on March 13, and accelerated to exceed US$60,000 on March 14, reaching a maximum of US$60,020, but did not stand firm. After the breakthrough, it quickly fell back, leaving behind a needle.
On March 15th I went to check my position and found:
1
1. Both Take Profit Order 1 and Take Profit Order 2 have been triggered;
2
2. I still hold a long position of 5 BTC without take profit;
3
3. There is a pending order in my current order, the order price is 60000, and there is no transaction at all;
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That is to say, only the take profit order 1 is filled, and the take profit order 2 is not filled.
This is a normal phenomenon, because when BTC reaches $60,000, the take-profit order is triggered, and the system immediately starts to place a take-profit order. However, during the placing of the order, the market price has dropped below $60,000, and the limit of selling flat-out at $60,000 Although the price order has been placed, it cannot be traded at the top of the market!
So I have gained experience: when there is a limit price, take profit and stop loss, in order to increase the probability of closing the limit order, generally do not set the order price and the trigger price to be the same, but reserve a part of the slippage area. For example: Take profit for a long position, the trigger price is $60,000, and the order price can be set to $59,900, because a short order of $59,900 is easier to fill in the market near $60,000!
Market Stop Loss Scenario
On March 14, 2021, BTC strongly broke through $60,000. I took out all my assets and opened a long position of 1,000 BTC. The opening price was $60,000, and the target was $100,000. But in order to be more stable, I set a market stop order of $54,000 with the following parameters:
1
Trigger price: 54000 USDT
2
Order Amount: 1000 BTC
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Afterwards, BTC failed me, slumped all the way, and finally fell below $54,000 on March 23.
On March 24th I went to check my position and found:
1
1. My position is completely closed;
2
2. From the historical orders, the average closing price of the 1,000 BTC is $53,600, not $54,000;
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That is to say, although the stop loss is in place, I suffer from relatively large slippage.
So I got the experience: do not use the market price to close the stop loss for a large position, it is better to use the stop loss in batches or the stop loss at the limit price.