Take-Profit and Stop-Loss: Answers to the Most Commonly Asked Questions
This article will lift the veil of mystery from the subject by answering the most frequently asked questions regarding take-profit and stop-loss orders.
This article will focus on a hands-on approach to the stop-loss and take-profit functionality of the Bitget exchange. Below are some of the most commonly asked questions regarding the stop-loss and take-profit functions. For an in-depth article on how to find levels to take profits and place a stop loss, read this article: Stop Loss Levels and Take Profit Levels Explained
What is a take-profit/ stop-loss?
A frequent contract trading strategy known as "taking profit" involves users believing that the price has reached an important point, in which they believe it a wise decision to realize some profit. By taking profit, the trade position is being reduced and as a result unrealized profits have now been turned into real profit, ready to be cashed out.
Stop loss is a common contract trading operation in which users believe that the price has reached a level where the trade can be cut for a reasonable loss to avoid doing irreparable damage to their portfolio. Using a stop loss is a way to deal with risk.
Bitget currently provides a TP/SL order: users can set the TP/SL price in advance. When the latest market transaction price reaches the TP/SL price you set, it will close the position at the number of contracts you set for this position at the optimal transaction price.
Note: Only the advanced mode allows for “partial” stop-loss. Using a stop loss directly upon opening the position, or in basic mode will close the entire position, as seen in Figure 2.
When to use take-profit/ stop-loss?
Generally, when the user has a position and cannot keep track of the market for a long time, he can consider using the TP/SL to place an order. But in principle, as long as the user has a position, he or she can use the TP/SL under any circumstances according to his or her actual needs.
Can take-profit and stop-loss only close positions?
Yes. Take-profit and stop-loss orders can only reduce an existing position. Trigger or limit orders can be used to open positions instead.
Are the take-profit and stop-loss orders tied to the open position?
Yes, TP/SL order is based on your current position. You cannot set a TP/SL order when you have no position. You can set the order quantity according to the liquidable quantity in the position.
In other words, if you have a position of 500 contracts, a TP/SL order can be set with a maximum contract quantity of 500. However, if you have placed a limit order to close a position of 100 before setting the take profit and stop loss, then the quantity that can be closed at this time becomes 400. Once the limit order is executed and fully filled, the maximum take profit and stop loss quantity of this position will automatically be reduced to 400.
When you do not have a position open, you cannot set a TP/SL order.
How to cancel a take-profit and stop-loss order?
In your current plan list, TP/SL orders will be displayed in the list with separate labels (take profit, stop loss), and you can cancel them manually on the Tradingview chart that is integrated within the Bitget trading interface (see Figure 3). When the position is closed either manually, by take profit or stop loss, the outstanding TP/SL order will automatically cancel.
Can take-profit and stop-loss fail?
Yes. A stop-loss or take-profit order might not be fully completed in exceedingly rare circumstances and under extremely low liquidity trading situations, despite the fact that this rarely occurs in actual trading. What is more common is during times of heavy volatility and price fluctuations, the actual transaction price may be different from the price once a stop-loss or take-profit order is being hit. There is also the possibility that the TP/SL orders cannot be filled or not fully filled.
A few more things to be aware of
- Agreement close, automatic close, liquidation, and manual liquidation will affect the number of take-profit and stop-loss contracts in the outstanding order. If the position is closed, any take-profit and stop-loss orders will be canceled.
- The expected liquidation price change caused by the manual adjustment of the margin may cause the take-profit and stop-loss to fail.
- A maximum amount of 20 TP/SL orders can be set.
- Traders cannot use the take-profit and stop-loss of the total position, but can use the take-profit and stop-loss of the position in the my copies.
If the market fluctuates greatly, there is a possibility that the TP/SL order cannot be traded or cannot be fully traded, please be sure to understand the function principle in detail and use it with caution and awareness!
When the latest transaction price in the market reaches the TP/SL price you set, the number of contracts you set for this position will be placed into a pending order in the form of the optimal transaction price.
Bitget is not responsible for any asset losses caused by marke t price fluctuations.