Stop-Loss
Last updated
Last updated
A Stop-Loss (SL) order is a type of order used in trading to help limit potential losses on a position. It is designed to automatically trigger a market or limit order to buy or sell an asset if its price reaches or falls below a specified level, known as the stop price.
For a long position, a trader places the trigger below the current market price.
For a short position, a trader places the trigger above the current market price.
When you place a SL order, you set a stop price, which is the price at which you want the order to be triggered. If the market price of the security reaches or drops below the SL price, the SL order is activated, and a buy or sell order is executed to close your position.
The purpose of a SL order is to protect traders from significant losses in the event that the market moves against their position. By setting a SL trigger, you define the maximum amount of loss you are willing to accept on a trade.
There are two main types of SL orders: market and limit.
SL Market Order: This type of SL order is executed as a market order once the SL trigger price is reached. It guarantees that the SL order will be executed promptly, but the actual price at which the asset is bought or sold may differ from the SL price if the market is volatile.
SL Limit Order: With a SL limit order, the order is triggered when the SL trigger price is reached, but the buy or sell order is executed at a specified limit price or better. It provides more control over the buying and selling price, but there is a possibility that the SL order may not be filled if the market price doesn't reach the limit price.
To place a SL Market Order:
Select your Order Type (Limit, Market, Stop Limit, Stop Market) and input the necessary details for your order based on the selected order type.
Choose either Buy/Long or Sell/Short.
Check the TP/SL box to activate the feature.
Set SL Market Order: By default, Market Order is enabled.
Set your SL Tigger based on the Mark, Index or Last Price.
Adjust the Leverage Slider to your desired position leverage.
To place a SL Limit Order:
Select your Order Type (Limit, Market, Stop Limit, Stop Market) and input the necessary details for your order based on the selected order type.
Choose either Buy/Long or Sell/Short.
Check the TP/SL box to activate the feature.
Set SL Limit Order: By default, Market Order is enabled. By default, Market Order is enabled. For Limit Order, uncheck the box.
Set your SL Tigger based on the Mark, Index or Last Price.
Adjust the Leverage Slider to your desired position leverage.
Stop-Loss orders are essential risk management tools as they help traders protect their capital and limit potential losses. They provide a level of automation and ensure that a position is closed when the market moves unfavourably, helping traders adhere to their risk management strategies.
