Take-profit and stop-loss orders are a type of strategic trading tool that allows users to preset target price levels or profit/loss ratios. When the market price reaches the specified trigger or the floating profit/loss meets the set percentage, the system will automatically place an order accordingly. These settings can be configured as one-way or two-way. In a two-way setup, when one side is triggered, the other is automatically canceled.
Understanding Order Parameters
Trigger Price
The trigger price is the value you set. Once the "last traded price" hits this level, the take-profit or stop-loss order will be activated.
Order Price
After the order is triggered, it will be executed at the designated order price. There are two primary types of order placements:
Market Take-Profit/Stop-Loss
When the last price reaches your preset trigger, a market order is placed to close the position. Due to market fluctuations, the actual execution price might differ from the expected price.
Limit Take-Profit/Stop-Loss
Once triggered, a limit order is used to close the position. Depending on the set limit price and market conditions, the order may not be filled immediately or may be partially filled.
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Important Considerations
- Currently, limit take-profit/stop-loss orders are only supported for existing open positions and pending orders. They cannot be set at the time of opening a new position.
- In portfolio mode, only one set of take-profit/stop-loss parameters is allowed per cryptocurrency and per direction (i.e., long or short).
- For limit take-profit/stop-loss orders, the fee structure is not necessarily the maker rate. In the matching market, those providing liquidity (makers) receive a rebate, while those taking liquidity (takers) pay a fee.
Portfolio Mode Examples
- Scenario 1:
Order 1: A limit order is placed to open a long ETH position with take-profit/stop-loss settings.
Order 2: A market order opens another long ETH position without take-profit/stop-loss.
Result: Order 2 automatically inherits the take-profit/stop-loss settings from Order 1. Always check existing settings when adding to a position in portfolio mode. - Scenario 2:
Order 1: An existing long ETH position has no take-profit/stop-loss configured.
Order 2: A new market/limit long ETH order includes take-profit/stop-loss settings.
Result: Once Order 2 is executed, the take-profit/stop-loss parameters apply to both positions. - Scenario 3:
Order 1: A long ETH position has take-profit/stop-loss set at Price A.
Order 2: A new market/limit long ETH order sets take-profit/stop-loss at Price B.
Result: After Order 2 is placed, the entire portfolio position updates to Price B.
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Frequently Asked Questions
What is the main purpose of a stop-loss order?
A stop-loss order is designed to limit potential losses by automatically closing a position when the market moves against you. It helps manage risk and protect your capital.
How does a take-profit order work?
A take-profit order closes a position once a predetermined profit level is reached. This allows traders to secure gains without constantly monitoring the market.
Can I modify a take-profit or stop-loss order after placing it?
Yes, most trading platforms allow users to adjust or cancel these orders as long as they haven’t been triggered yet.
What’s the difference between market and limit order execution?
Market orders are executed immediately at the current market price, which may vary. Limit orders are filled only at the specified price or better, offering more control but no guarantee of execution.
Are there fees associated with these order types?
Yes, fees may apply depending on whether the order acts as a maker or taker. Always review the fee schedule on your trading platform.
Is it possible to set both orders simultaneously?
Absolutely. A two-way take-profit/stop-loss order lets you set both profit-taking and loss-limiting levels at the same time. If one is triggered, the other is canceled automatically.