Stop loss and take profit, and where they fail
A stop is a trigger, not a promise. Most of the trouble people have with them comes from expecting a guaranteed exit price from an order type that never offered one.
- Live product data
- Self-custodial
- Human confirmed
What a stop actually does
A stop-loss sits dormant until the market reaches your trigger price, and then submits an order. If that order is a market order, you get whatever the book offers at that moment, which in a fast move can be meaningfully worse than the trigger. If it is a limit order, you get your price or you get nothing, and "nothing" during a crash means the position is still open and still losing.
Take profit is the same machinery, pointed the other way
A take-profit triggers on a favourable move instead of an adverse one. The same trade-off applies: a market exit fills but may slip, a limit exit holds its price but may be skipped if the market trades through it without filling you.
Where they fail
The common failures are all versions of the same thing: the trigger fired and the fill was not what you pictured.
- Gaps: a market that reopens past your trigger fills far below it
- Thin books: a market stop walks the book and slips
- Limit stops in a crash: never filled, position survives the trigger
- Stops placed at obvious round numbers, where resting liquidity clusters
- Trigger set on last trade rather than mark price, so a wick fires it
Placing one usefully
Put the stop where the idea is wrong, not where the loss becomes uncomfortable, and then size the position so that the distance to that level is a loss you can accept. That order of operations is the whole discipline: the stop defines the size, rather than the size defining a stop that gets moved when it is inconvenient.
Trailing stops and bracket orders
A trailing stop moves the trigger with the market, keeping a fixed distance behind the best price reached and staying put when the market goes the other way. It converts a stop into a way of holding a trend without deciding in advance where it ends, at the cost of being taken out by ordinary noise if the trail is tight. A bracket pairs a stop and a take-profit on the same position, and the pair should be linked so that one cancelling the other is automatic. Both should be flagged reduce-only, or an exit that arrives after the position has closed opens a new one in the opposite direction.
Frequently asked questions
- Is a stop-loss guaranteed to close at my price?
- No. It guarantees an order is submitted when the trigger is hit, not the price you receive. Only a venue explicitly offering guaranteed stops provides that, usually for a premium, and that is uncommon on-chain.
- Should I use a market stop or a limit stop?
- A market stop when getting out matters more than the price, which is most risk-management cases. A limit stop when you would rather stay in than exit at a bad price, which is a deliberate and occasionally expensive choice.
- Do stops work while I am offline?
- On a venue that holds the order server-side, yes. An order that only lives in your client stops existing when the client does, which is a question worth asking of any app before relying on it overnight.
- Does a stop protect me from liquidation?
- Only if it triggers above your liquidation price and actually fills. A stop set beyond that level is decoration; the liquidation engine reaches the position first.
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Move from reference to the live product when you are ready.
Perpetual futures are leveraged instruments and can lose more than your initial margin. Nothing on this page is investment advice.