The terms Stop Loss and Stop Loss Limit are used interchangeably in our docs. Currently, Perp v2 only supports limits and stop loss limits as advanced order types.
A stop loss limit order is a conditional order that allows traders to set a trigger price at which a limit order to buy or sell is submitted, enabling greater precision when executing a trade. Once the trigger price is reached, the stop loss order becomes a standard limit order that will execute at the limit price or better.
Stop loss orders are used to manage risk. Traders can define the maximum loss of a trade beforehand. The stop-loss limit order type on Perp v2 is designed similarly to FTX's.
For example, you think that any bullish price action will be invalidated if the price falls below $950 and a long position of 1 ETH was opened at $1,000. A stop loss limit order with a limit price of ~$950 and a trigger price at $960 can be used to limit the risk of the long position.
If the index price falls below $960, then a stop loss limit order is sent to sell ETH and unwind the long position once market reaches the limit price of $950. The stop loss limits risk in the case where the price falls even further.
How to Submit a Stop Loss
Change the order type to "Stop Loss Limit".
- When selecting "Long" + "Stop Loss Limit", this order combination assumes you already have an existing short position. When the index price exceeds the trigger price, the limit order will be sent.
- When selecting "Short" + "Stop Loss Limit", this order combination assumes you already have an existing long position. The limit order will be sent once the index price drops below the trigger price.
Stop Loss Limits have a minimum position requirement of $100.
Enter the trigger price and limit price. Input the size of the position using the amount field or the buying power slider.
As with limit orders, there are several expiry options for stop losses between 5 minutes and one week. The expiration option can be changed by using the dropdown menu (click on the clock icon).
Submit the stop loss using the "Confirm Limit Order" button and sign the transaction in your wallet.
There are no gas or trading fees to submit stop loss orders.
Once the index price crosses the trigger price, the stop loss is submitted as a limit order. The stop loss will close out your existing position once the mark price reaches the limit price. Trading fees are not paid from your account balance until the stop loss has been filled.
There are no partial fills, so stop losses will either fully execute or not fill at all. Once a stop loss has been filled, it will be shown under the Fills column and in your transaction history.
Cancelling a Stop Loss
All stop loss order cancellations are done on-chain, so there's a gas cost involved.
Active stop losses are displayed under Limit Orders tab, where you can view important details about the order, as well as a "Cancel" button.
After clicking "Cancel", confirm the transaction in your wallet and pay the required gas fee to cancel the order. Shortly after the transaction is confirmed, the stop loss order will be removed.
As with market orders, stop loss orders may incur slippage. Depending on liquidity and market conditions, the fill price may differ slightly to the limit price. Also, an order will only get executed if it matches the user’s specified conditions/requirements, including price, amount, and expiration date.
If the price impact of an order is great enough to cause the mark price to be pushed away from the limit price, then the order will not be executed.
Example: a stop loss limit order to sell ETH is set with a limit price of $1,000 and trigger price of $1,005. If the size of the order is too large compared to the available liquidity, and results in slippage of more than 0.5%, then the stop loss limit will not be executed. Once the index price drops below $1,005, the limit price of $1,000 for this order is not feasible due to the slippage and the specified price of the stop loss order isn't matched by the market price.
In this case, the mark price will have to be below the limit price by an amount that allows the order to be triggered without putting the final open price above the specified limit price. E.g., the mark price falls to $995, and the order is triggered, since liquidity in the market is sufficient to keep the final opening price below $1,000.