If you already know what is TP/SL and how it can help you, you can read the more comprehensive introduction to know the advanced features: “Introduction to TP/SL“.
Have you ever encountered these scenarios:
- After going long certain futures contract, the market quickly reverses, and the price continues to fall, causing losses to continue to expand. You want to wait for the price to rise but it never happens. In the end, you have to choose to close the position and take on a lot of losses.
- After going long certain futures contract, the price keeps rising. However, you are overly optimistic about the market, thinking that the price will continue to rise, so you did not close your position at the right time. After a while, the price quickly falls, making you miss the opportunity to take profit.
- After going long certain futures contract, you can’t pay attention to the position information due to other stuff. When you have time to check, you find that the position has been liquidated, and a high liquidation fee has been charged.
Don’t worry, Pionex provides you with “TP/SL (Take Profit and Stop Loss)” to solve these problems.
Contents
What is TP/SL
TP/SL is a tool used to help you take profit and stop loss. In Pionex futures trading, users mainly use TP (Take Profit) to protect profits, and SL (Stop Loss) to limit losses. When using, you need to set the trigger price of the TP and SL order. When the current price reaches the trigger price, the system will close your position with a market order to take profit or stop loss in time.
Next, let’s see how TP/SL can help you solve the above problems.
How TP/SL can help you solve problems
Assume that the futures you go long is BTCUSDT perpetual futures, and the current price is 30,000 USDT.
- After going long it, to prevent a large amount of losses, you set an SL with a trigger price of 29,000 USDT. In this way, when the price drops to 29,000 USDT or below, the system will immediately close your position, avoiding a large amount of losses caused by the subsequent continuous price drop.
- After going long it, to prevent yourself from missing profits, you set a TP with a trigger price of 31,000 USDT. In this way, when the price rises to 31,000 USDT or above, the system will immediately close your position, preventing you from missing profits caused by the subsequent market reversal.
- After going long it, to prevent the position from being liquidated, you set an SL with a trigger price higher than the estimated liquidation price of 28,000 USDT, like 28,500 USDT. In this way, before reaching the liquidation price, the system will automatically close the position for you, reducing the risk of getting liquidated.
And the trading fee charged for closing the position is much smaller than the liquidation fee. As of the time of writing this article, the liquidation fee rate of this futures is 1.15%, and the trading fee rate does not exceed 0.05%. If you hold a futures position of 1 BTC:
Liquidation fee is approximately: Estimated liquidation price * Position size * Liquidation fee rate = 28,000 * 1 * 1.15% = 322 USDT
Trading fee is approximately: Average closing price * Position size * Trading fee rate = 28,500 * 1 * 0.05% = 14.25 USDT
Look, by setting a SL, you successfully avoid the liquidation fee that is 22.5 times greater than the trading fee!
No one will know what will happen in the cryptocurrency market. TP/SL can help you avoid unknown risks and better control the expected profit and loss of each position.
Next, let’s take a look how to do these things at Pionex.
Note: SL orders cannot make sure preventing liquidation. When the liquidation price changes or the market fluctuates drastically, the SL order may fail.
How to set TP/SL on the web
Assume that you hold a BTCUSDT perpetual futures position, the current price is 30,000 USDT, and you want to set a TP at 31,000 USDT and an SL at 29,000 USDT. The operation process is as follows:
We have also prepared a video version for you:
How to set TP/SL on the APP
Assume that you hold a BTCUSDT perpetual futures position, the current price is 30,000 USDT, and you want to set a TP at 31,000 USDT and an SL at 29,000 USDT. The operation process is as follows:
We have also prepared a video version for you:
Conclusion
TP/SL is excellent way to reduce risk. When you predict market trends successfully, TP orders can help you protect profits. And when market trends go against your positions, SL orders can help limit losses. Therefore, TP/SL can be considered free insurance for your futures account.
Even with unclosed positions, you can rest assured doing other stuff because TP/SL orders will execute automatically at suitable times.
Welcome to practice real-time trading with zero risk in Pionex’s futures demo trading. In demo trading, you can experiment with different risk levels using demo funds to hone your trading skills. After fully understanding how to set TP/SL, you can switch to Pionex’s live futures market for real-time trading.
Learn more
- A more comprehensive feature introduction: “Introduction to TP/SL“
- FAQs：“How to Choose ‘Last Price’ or ‘Mark Price’ for TP/SL?”
