What is Take-Profit / Stop-Loss (TP/SL)?
TP/SL means presetting a price in advance in a transaction, once the market’s last price (whether it be the last price, mark price or index price) reaches the specified trigger price, the system automatically places an order according to the preset order type, price and amount. TP/SL helps traders manage risks in a volatile market and ensure the safety of their trades.
Key Terms and Parameters
When using TP/SL functions, it is important to understand the following key terms and parameters:
- Trigger Price: When the market price reaches this level, the preset order will be activated by the system.
- Order Price: After the trigger price is reached, the system executes the buy or sell operation at the order price.
- Last Price: The most recent fill price in the market.
- Mark Price: A price used to avoid market manipulation, calculated by the platform based on a series of parameters.
- Index Price: An average price derived from multiple exchanges, reflecting the overall market price level.
Notice
- The actual fill price of orders on the order book might differ from the last price, mark price or index price, especially during periods of high market volatility.
- The funds in the futures account will not be locked as margin until the TP/SL is triggered and placed with the preset price and amount.
You won’t get a warning about insufficient balance when setting TP/SL orders because funds aren’t locked until the order triggers. To avoid order failure due to insufficient funds, we advise you to check the available balance beforehand.
Differences and Applicable Scenario of Last Price, Mark Price and Index Price
| Meaning | Applicable Scenario | |
|---|---|---|
| Last Price | The most recent fill price in the market, reflecting the current market situation. | Suitable for situations that require quick execution of trades based on the latest market dynamics. |
| Mark Price | A price calculated by the platform to prevent market manipulation and unreasonable price fluctuations. | Suitable for scenarios with high market volatility, aiming to mitigate the risk of abnormal price fluctuations. |
| Index Price | An average price based on multiple exchanges, providing a broader market price reference. | Suitable for scenarios where consolidating prices across multiple platforms is needed for more robust trading decisions. |
Gate TP/SL Types: Differences and Applicable Scenarios
Below is a brief introduction to the various TP/SL types supported by Gate, including Order TP/SL, Entire Position TP/SL, Partial Position TP/SL, Trailing TP, and MMR Stop-Loss, along with recommended scenarios for use. For detailed instructions, please refer to:
- How to Set Take-Profit and Stop-Loss (TP/SL)
- How to Set Trailing Stop/Trailing TP Orders
- How to Set MMR Stop-Loss
| Meaning | Applicable Scenario | |
|---|---|---|
| Order TP/SL | A type of TP/SL that can be set when placing an order, and the TP/SL order with the preset amount will be submitted once the entry order is filled. Currently, only limit orders, market orders, and conditional orders support setting TP/SL conditions at the time of placing the order. | Suitable for orders with a clear trading strategy. When opening a position, if the TP/SL conditions are already determined, you can quickly set prearranged exit strategies by entrusting these conditions, simplifying operations. |
| Entire Position TP/SL | A type of TP/SL that you can set for an existing position, and the entire position will be closed when the trigger conditions are met. | Useful when multiple orders to increase or decrease positions make the position size unclear. The Entire Position TP/SL ensures that when the TP/SL conditions are triggered, the entire position will be closed, providing better risk control. |
| Partial Position TP/SL | A type of TP/SL that allows you to set TP/SL conditions and the amount for an existing position, which will be closed when the trigger conditions are met. | Suitable for users with multiple TP/SL levels, and it allows partial exit at different levels to meet the user’s strategy. |
| Trailing TP | A type of TP/SL based on trailing stop orders that adjusts the trigger price as the market moves. | Best for trending markets. When the price moves in the direction you expect, the trailing TP order will automatically adjust the trigger price to lock in profits. |
| MMR Stop-Loss | A stop-loss order triggered by the maintenance margin level, helping users proactively manage account risks. | Recommended for traders who trade multiple coins at the same time. When the market fluctuates heavily, the MMR stop-loss helps prioritize liquidation timing based on changes in the maintenance margin level, allowing you to preserve important positions while reducing liquidation risks. |
Why Set TP/SL?
In futures trading, market prices can be extremely volatile, especially when leverage is used, amplifying both potential profits and risks. By setting TP/SL orders, trades can be executed automatically when prices reach preset trigger points, effectively locking in profits or controlling losses.
For example, suppose you purchase 1 BTC contract at a price of 50,000 USDT with 10x leverage. In this scenario, if the BTC market price rises to 55,000 USDT, you can set a take-profit order to automatically close the position, securing a profit at 50,000 USDT. Similarly, if the price drops to 48,000 USDT, a stop-loss order can automatically close the position when the last price reaches 48,000 USDT, limiting your loss to 20,000 USDT.
| Condition | Price (USDT) | Leverage | Result Without SL | Result With SL |
|---|---|---|---|---|
| Buy 1 BTC | 50,000 | 10x | - | - |
| Market price rises to | 55,000 | 10x | No timely close; if the market pulls back, profits will decrease. | Take-profit close, locking in a 50,000 USDT profit. |
| Market price falls to | 48,000 | 10x | No timely close; if the market continues to drop, losses will increase. | Stop-loss close, limiting the loss to 20,000 USDT. |
As the table above demonstrates, setting TP/SL orders can help protect your investment in a highly volatile market and ensure that you lock in profits when prices reach your expected targets. This is especially important for avoiding emotional trading and unpredictable market changes.
TP/SL is a powerful risk management tool. By understanding the differences between trigger price and order price, as well as the distinctions between the last price, mark price, and index price, you can better utilize these features to enhance trading efficiency and market responsiveness. By choosing the appropriate type of TP/SL according to different trading needs, you can effectively lock in profits and limit losses, ensuring the safety and stability of your trades.
Gate reserves the final right to interpret the product.
For further assistance, please visit the Gate official support page or contact our customer support team.
