What is a Stop Loss Order?

• Updated

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.