Have you ever encountered these scenarios:
After going long on a certain futures contract, the market quickly reverses, and the price continues to decline, causing losses to continue expanding. 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 on a 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 a 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, Picol 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 Picol 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 Picol.
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
The TP/SL (Take Profit/Stop Loss) orders support two modes:
Entire position: When the trigger price is reached, the entire position will be closed at the market price.
Partial position: You can set the quantity to be closed when the trigger price is reached, and only that quantity will be closed at the market price.
You can set TP/SL orders either when placing a new order or on an existing position, both via the app and the web.
In APP：
To use the TP/SL described in this article, please update your Picol app to the latest version.
TP/SL When Placing an Order:
By default, the Entire position mode is used when placing an order. Click on the TP/SL checkbox and enter the desired TP and SL values before placing your order. Please note that you can also set only a TP or SL value — you don’t have to input both.
If you want to use the Partial position mode, click on [Advanced] select the [▼] and choose [Current Order]:
TP/SL on an Existing Position:
To set TP/SL for an Entire position, click on the [TP/SL] button on your existing position, choose [Entire Position], enter the desired TP and SL values, and finally click [Confirm] to finalize.
Note: If both TP and SL are set simultaneously and one of them is triggered, the other will be canceled automatically.
You can use the Partial position mode to set up a step-by-step TP/SL strategy.
Example:
Suppose you currently hold a long position in BTCUSDT with a quantity of 4.55 BTC, and the current price is 109,100 USDT. You want to set three TP orders to achieve step-by-step TP:
When the price reaches 120,000 USDT, TP 0.55 BTC.
When the price reaches 122,000 USDT, TP 2 BTC.
When the price reaches 124,000 USDT, close the entire position for profit.
Procedure:
1 – Click on [TP/SL] - [Partial Position]:
2 – Set the first TP order with a trigger price of 120,000, using the Partial position mode with a quantity of 0.55.
3 – Click on [Add TP] to add the second TP order with a trigger price of 122,000, using the Partial position mode with a quantity of 2.
4 – Finally, add the third TP order with a trigger price of 124,000, using the Entire position mode. This order will close the entire position when triggered.
6 – After setting them, your three TP orders will be displayed in the order of their triggers. The orders with trigger prices closer to the current price will be triggered first. The process is as follows:
When the price rises to 120,000 USDT, TP order 1 will be triggered. After the order is executed, the position quantity will be 4.55 – 0.55 = 4 BTC.
When the price rises to 122,000 USDT, TP order 2 will be triggered. After the order is executed, the position quantity will be 4 – 2 = 2 BTC.
When the price rises to 124,000 USDT, TP order 3 will be triggered, and the position will be fully closed.
On Web：
TP/SL When Placing an Order:
By default, the Entire position mode is used when placing an order. Click on the TP/SL checkbox and enter the desired TP and SL values before placing your order. Please note that you can also set only a TP or SL value — you don’t have to input both.
If you want to use the Partial position mode, click on [Advanced settings], select the [▼] icon, and then choose [Current Order]. Finally, click [OK].
TP/SL on an Existing Position:
To set TP/SL for an Entire position, click on the [Settings] button under TP/SL on your existing position, choose [Entire Position], enter the desired TP and SL values, and finally click [OK] to finalize.
Note: If both TP and SL are set simultaneously and one of them is triggered, the other will be canceled automatically.
You can use the Partial position mode to set up a step-by-step TP/SL strategy.
Example:
Suppose you currently hold a long position in BTCUSDT with a quantity of 4.55 BTC, and the current price is 109,100 USDT. You want to set three TP orders to achieve step-by-step TP:
When the price reaches 120,000 USDT, TP 0.55 BTC.
When the price reaches 122,000 USDT, TP 2 BTC.
When the price reaches 124,000 USDT, close the entire position for profit.
Procedure:
1 – Click on [TP/SL] - [Partial Position] - [Add TP]
2 – Set the first TP order with a trigger price of 120,000, using the Partial position mode with a quantity of 0.55.
3 – Click on [Add TP] to add the second TP order with a trigger price of 122,000, using the Partial position mode with a quantity of 2.
4 – Finally, add the third TP order with a trigger price of 124,000, using the Entire position mode. This order will close the entire position when triggered.
6 – After setting them, your three TP orders will be displayed in the order of their triggers. The orders with trigger prices closer to the current price will be triggered first. The process is as follows:
When the price rises to 120,000 USDT, TP order 1 will be triggered. After the order is executed, the position quantity will be 4.55 – 0.55 = 4 BTC.
When the price rises to 122,000 USDT, TP order 2 will be triggered. After the order is executed, the position quantity will be 4 – 2 = 2 BTC.
When the price rises to 124,000 USDT, TP order 3 will be triggered, and the position will be fully closed.
Conclusion
TP/SL is an 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 Picol’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 Picol’s live futures market for real-time trading.
FAQ
Q： Why are some TP/SL orders inactive?
A： TP/SL orders are executed based on priority, with orders closer to the current price having higher priority. If higher priority TP/SL orders are sufficient to fully close the position, the subsequent orders will become inactive. As an example:
Suppose you hold a long position of 3 ETH in ETHUSDT, with the current price at 1,800 USDT, and you have set up 3 SL orders:
Trigger price = 1,700 U; Quantity = 1 ETH
Trigger price = 1,600 U; Quantity = 2 ETH
Trigger price = 1,500 U; Quantity = 1 ETH
The first two SL orders are closer to the current price and have higher priority. Once triggered, they are sufficient to close the entire position (3 ETH). As a result, the third SL order becomes inactive, as shown in the diagram:
However, inactive does not mean that the SL order is canceled. If you increase your position before the position is fully closed, for example, if you increase the position to 4 ETH before the second SL order is triggered, then the third SL order will no longer be inactive because the first two orders are not sufficient to fully close the position:
Q： What happens if my position size is greater than the maximum quantity for market order? How will my “Entire position” TP/SL be executed?
A： The system will resubmit the TP/SL order until the entire position is closed. Please note that due to the market order execution, there may be price differences.
Q： Why was my position liquidated despite having a SL order?
A： One possibility is that your stop-loss trigger price is too close to the liquidation price. When the market experiences violent fluctuations, the price may not reach the stop-loss price first, but instead directly reach the liquidation price, causing the position to be liquidated and the stop-loss to fail.
Another possibility is that you are using the last price as the trigger price for your stop-loss order. Since liquidation is triggered by the mark price, the mark price may trigger the liquidation before the stop-loss order is triggered by the latest price.
To avoid liquidation, it is recommended that you don’t set the stop-loss price too close to the liquidation price. Additionally, using the “mark price” as the trigger price can also reduce the risk of being liquidated even when a stop-loss order is in place. Here is how to adjust the trigger price type for stop-loss orders:
Q： How can I decide whether to use the mark price or last price as the trigger for TP or SL?
A： To know how to choose mark price or last price for triggering price based on usage scenarios, please refer to: How to Choose “Last Price” or “Mark Price” for TP/SL?
Please get in touch with Picol Support if you have any other questions.