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CoinEx | Helping Futures Traders Control Position Risks Through Take-Profit & Stop-Loss

2022-03-23 10:36:15

With the help of Take-Profit and Stop-Loss, futures traders can set the trigger price (i.e. TP or SL Price) and the liquidation price in advance, so that when the latest price reaches the pre-set price, the relevant positions will be liquidated according to the pre-set price and amount. This function is particularly helpful in the volatile crypto market: Stopping loss in time helps users guard against losses and avoid the further flare-up of risks; taking profit promptly allows them to retain profits and prevent additional losses.

Take-Profit & Stop-Loss allows you to control your risks and profits within a certain range, thereby minimizing the risks while maximizing the profits. In other words, you will be able to lower your losses to the greatest extent possible even if you pick the wrong direction (long/short). Meanwhile, the function also helps you foster good investment habits and improve trading tactics. With Take-Profit & Stop-Loss, you can overcome your greed and fear by relying on automatic liquidation.

On CoinEx, you can set the TP/SL Price in advance when trading futures, and your positions will be automatically liquidated once the market price reaches the preset prices. In addition, your positions will not be automatically liquidated when the market price falls within the preset range without hitting the TP/SL Lines unless you manually close the positions.

Right now, the function is only available for the entire position — it only supports liquidation of a full position, not partial liquidation. Therefore, if you set the TP/SL Price for a position, it (including the increased position during the trading process) will be liquidated as a whole, and the increased position will not be separately preserved. Let’s go through this principle in the following examples.

Example 1: Suppose User A starts a 10X long position of 0.01 BTC at 51,000 USDT and set the TP/SL Price to 55,000 USDT and 50,000 USDT, respectively. If he adds a 10X long position of 0.02 BTC at 52,000 USDT, the entire position (0.03 BTC) will be automatically liquidated when the BTC price reaches 55,000 USDT.

The TP/SL strategy centers on the current position for which the TP/SL Price is set. When the position falls to 0 and another position is started, you will have to reset the TP/SL Price for the new position.

Example 2: User A manually liquidates his entire position (0.03 BTC) at 53,000 USDT, which means that the TP/SL strategy has ended according to the rules. Suppose he starts another long position of 0.02 BTC. By default, the new position does not come with any TP/SL Price, which must be set manually. 

Example 3: Suppose User A manually liquidates half of his entire position at 53,000 USDT, which means that a long position of 0.015 BTC was liquidated, then the TP/SL settings (50,000-55,000 USDT) would remain valid.

Example 4: Suppose User A has a long position of 0.03 BTC when the BTC price stands at 51,000 USDT, with the TP/SL Price set to 55,000 and 50,000 USDT, respectively. If only a long order of 0.01 BTC is executed, the order will be sold when the market price hits the TP Price (55,000 USDT), while the unexecuted 0.02 BTC will be canceled automatically.

Although futures are tools that help investors multiply their profits with a small principal, they are also subject to many potential risks, which is particularly true during extreme market swings. On CoinEx, Take-Profit & Stop-Loss not only helps you manage your positions more effectively but also allows you to mitigate the risks and improve the probability of profit. With this function, futures traders could keep their losses to the minimum even during a black swan event.

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