A Stop Loss (SL) is an automatic order that closes your position if the price moves against you beyond a chosen level. This protects you from larger losses.
Types of Stop Loss
You can choose between multiple types of Stop Loss.
Single SL
Single SL will create a single Stop Loss order that will close 100% of the position. The Distance inputs defines how far from the entry price the Stop Loss trigger price will be. Remember that distance is always expressed as a percent of price distance, never ROE.
Example: John wants to close his long BTCUSDT position as soon as the price retraces 2% from the entry price. He will use a Single SL with a distance of 1%. If the entry price for the BTC position was $100,000, his SL would be placed at $99,000. Remember the distance is expressed as raw price percent, which means that leverage is never taken into account when calculating the SL trigger price.
Single ATR SL
Single ATR SL will create a single Stop Loss order that will close the full position. The ATR inputs are used to calculate the current Average True Range (ATR) value and then used to calculate the trigger price. The Deviation inputs defines how far the Stop Loss trigger price will be from the position entry price, expressed as a multiplier of the current ATR value.
Example: John wants to close his long BTCUSDT position, opened at $100,000, using an ATR SL. He picks an ATR Length of 5, ATR Timeframe of 1h (one hour) and an ATR Maximum % of 2%. The current Average True Range for BTC, calculated on top of the last 5 1h candles, is $100 and his deviation is 3x. The SL will be created $300 (3 x $100) below the entry price. $300 is just 0.3% below the entry price, so his maximum percent distance of 2% is respected. Just like the normal Single SL, leverage is never taken into account when calculating the SL trigger price.
Timeout SL
The position will be closed after the number of minutes defined in Timeout Duration. You may enter decimal values. For example, a timeout duration of 0.5 means that the position will be closed after 30 seconds.
Offset Type
Offset type defines what the Stop Loss trigger price should be calculated against. There are three options:
Initial Entry Price: the Stop Loss distance will always be calculated from the original entry price of the position, no matter what happened afterwards
Current Entry Price: the Stop Loss will always be calculated as a distance from the current entry price. This means that if the position DCAs (i.e., the average entry price changes), the Stop Loss will be canceled and placed again according to the new entry price.
Account Balance: here, rather than defining a distance from the entry price, you can choose how much account balance should be lost in case the Stop Loss was to hit. For example, picking an Account Balance Lost of 5% means that 5% of your total balance will be lost in case the Stop Loss is hit. The actual SL price depends on the size and average entry price of the position, as well as your balance.
Timeout Option
All types of Stop Loss support a timeout. That is, you can choose to close the position after a certain number of minutes even when using Single SL or Single ATR SL. When the timeout expires, a market order to close the full position will be sent.
Ladder Mode
You can choose to adjust your Stop Loss trigger price whenever a Take Profit order is hit.
Level Based Ladder
Level Ladder is a tool to update the SL price whenever a TP is hit. Distance to Keep defines how far behind the SL price should be compared to the last TP fill price. Stop-Loss Buffer defines an offset to be added to the position entry price in order to cover for fees. The SL buffer only applies to the first SL adjustement, when it's moved to the position entry price (breakeven). This is useful to cover for fees, in order to ensure not to lost money even if the SL is hit, after it is moved to breakeven.
Example: John wants to update his SL whenever a TP is hit. He sets up Level Ladder with a distance of 1 and a buffer of 0.2%. As soon as the first TP is hit, his SL will be moved to the position entry price, plus a small buffer of 0.2% (expressed as price distance, leverage does not impact this). As soon as the second TP is hit, his SL will be moved to the 1st TP price, without the extra buffer.
Example: John wants the SL to always be two levels behind his last TP hit. He sets up Level Ladder with a distance of 2 and no buffer (0%). When his first TP is hit, nothing happens. When his second TP is hit, the SL is moved to breakeven. When his third TP is hit, his SL is moved to the 1st TP price.
Entry Price Ladder
Entry Price Ladder is a tool to move the Stop Loss price to breakeven as soon as a certain TP is hit (Take Profit to hit). The SL buffer defines whether the SL should be placed at a slightly higher price than the position entry price, in order to cover for potential trading fees and slippage.
Example: John wants his SL to move to breakeven as soon as the second TP is hit. He sets up an Entry Price Ladder with a Take Profit to hit of 1 and a buffer of 0.1%. As soon as the second TP is filled, his SL will be moved to the position entry price, plus an offset of 0.1% (expressed as price distance, leverage does not impact this).