How to set Stop-Loss and Take-Profit on WhiteBIT?

What are Take-Profit (TP) and Stop-Loss (SL)?

Take-Profit (TP) is the price level at which the trader wants to close the current position in order to lock in profit. When the price reaches the Take-Profit level, the order to close the position is automatically executed and the position is closed at the market price.

On the other hand, Stop-Loss (SL) is the price level at which the trader wants to close the current position to  avoid the loss. When the price reaches the Stop-Loss level, the order to close the position is also automatically executed and the position is closed at the market price.

Take-Profit (TP) и Stop-Loss (SL) are some of the main tools used to effectively manage risk, control emotions and adhere to trading strategies.

 

In this article, we will take a detailed look at what Take-Profit (TP) and Stop-Loss (SL) are, how they work on WhiteBIT, and why they are important tools for any trader looking to trade effectively in the digital asset market.

Learn more about Take-Profit (TP)

Take-Profit (TP) is a predetermined price level at which a trader intends to close a position for profit.

As a rule, the TP level is set above the entry price for long positions and below the entry price for short positions. Once the market reaches the set level, the position is automatically closed and the trader locks in his profit.

 

For example:

  1. A user opened a Long position for 1 ETH at the price of 2000 USDT:
  2. He decided to use a fixed profit strategy and set the Take-Profit target level at 15%.
  3. In this case he should set TP at 2300 USDT. If the price of ETH starts to rise and reaches the 2300 ETH level, then an ETH sell order will be set and executed automatically at the market price.
  4. If the target level is reached, the order will be executed, the user will receive a profit of 15% of the initial buy price, which is equal to: 2000 USDT * 0.15 = 300 USDT.

Read more about Stop-Loss (SL)

Stop-Loss (SL) is a request to automatically sell cryptocurrency if the price falls to a certain level. The tool is developed to manage risk and to limit potential investment losses.

SL is usually set at a price lower than the current market price for Long positions and higher than the current market price for Short positions. The order is triggered when the market price reaches the specified SL price and the asset is sold at the market price. This helps to protect the investor from further losses.

 

For example:

  1. A user opened a Long position for 1 BTC at the price of 40,000 USDT.
  2. The loss he is willing to incur from this trade is 8%.
  3. In this case, it is necessary to set SL at $36,800. And if the price of BTC starts to fall and reaches the level of $36,800, an automatic sell order will be set and executed at the market price.

 

TP and SL orders do not guarantee execution at a specified price, especially in a volatile market, if demand exceeds supply or if the position size is too large. Bids may be prone to overshoot and the execution price may be worse than the fixed SL price.

How do Take-Profit (TP) and Stop-Loss (SL) work on WhiteBIT?

On WhiteBIT you can set TP and SL only after you have opened a position. They can be used either individually or in combination. If one of the orders is executed, the other will be canceled automatically.

 

Technically, Take-Profit and Stop-Loss work as a Stop-Market order, but without specifying a quantity. This means that when the TP or SL level is reached, the exchange will automatically close the entire position at the market price.

 

The TP/SL function on WhiteBIT allows for more efficient risk management due to the simultaneous placement of several TP/SL orders. You can use it to adjust TP/SL while placing a limit, market or Stop-limit/Stop-Market order directly in the order settings area.

 

There are two options for placing TP/SL orders:

  • For the whole position – TP/SL is applied to the whole position. You can place one TP/SL order for one position. When the TP/SL trigger price you specify is reached, the entire position will be closed by the market order.
  • For the current order or part of a position – TP/SL is applied to the current order volume. You can place multiple TP/SL orders for a single position. When individual TP/SL orders reach the TP/SL "trigger" price you specify, the corresponding volumes are closed at market prices and the TP/SL is canceled.

 

We can see a more detailed difference between these options by comparing them in this table:

TP/SL settings For the whole position For a part of a position
Logic of order execution when the "trigger" price you specified is reached The TP/SL for the entire position is triggered and the position is closed with a market order. A separate TP/SL is triggered and the corresponding order volumes are closed at the market price when the price you specify is reached.
Maximum number of TP/SL orders that can be placed simultaneously Only one TP/SL order for one position. Multiple TP/SL orders for one position.
Increase in position volume and current position The volume of TP/SL orders is adjusted according to the size of open positions. Adjusting the size of open positions does not affect the volume of TP/SL orders.
Decrease in position and current position The volume of TP/SL orders is adjusted according to the size of open positions. Adjusting the size of open positions does not affect the volume of TP/SL orders.

 

Also, for better understanding, let's look at a few examples:

Scenario 1 – a trader has multiple TP/SL orders at the same time.

For example, the current market price of BTC is $25,000. A trader opens a Long position for 1 BTC and at the same time creates several TP/SL orders:

TP/SL order А

  • TP/SL parameters: for a part of a position (assume a market order)
  • TP trigger price: $26,000
  • Quantity: 0.5 BTC

TP/SL order В

  • TP/SL parameters: for a part of a position (assume a market order)
  • TP trigger price: $30,000
  • Quantity: 0.5 BTC

TP/SL order С

  • TP/SL parameters: for the whole position
  • SL trigger price: $23,000
  • Quantity: 1 BTC

 

In market conditions, the TP/SL function will work as follows:

  • When the market price of BTC reaches $26,000, TP/SL order A triggers and closes part of the 0.5 BTC position at the market price. The trader has a 0.5 BTC position (while TP/SL orders B and C remain active).
  • When the market price of BTC reaches $27,000, Trader A manually closes 0.1 BTC. The total position volume is now 0.4 BTC (with TP/SL orders B and C still active).
  • When the market price of BTC reaches $30,000, TP/SL order B is triggered and Take-Profit on the market order is 0.4 BTC (TP/SL order C is automatically canceled).

Scenario 2 – the trader already has a TP/SL order, and a new order with TP/SL (for the current order) is executed.

Assume that the current market price of BTC is $25,000. The trader has a Long position for 1 BTC, and the Take-Profit order has the following settings:

TP/SL order А

  • TP/SL parameters: for the whole position (by conditional market order)
  • TP trigger price: $26,000 
  • Quantity: 1 BTC

 

Then, the trader places a limit order to buy 1 BTC at $24,000 with a new Take-Profit of $27,000 and Stop-Loss of $22,000 for the 1 BTC contract (current order).

 

Under market conditions, the TP/SL function will work as follows:

  • If the market price falls to $24,000 and the limit order is partially executed for 0.5 BTC – the size of the current open position will be 1.5 BTC. In this case, a new TP/SL order will be placed as follows:

TP/SL order В

  • TP/SL parameters: for part of the position
  • TP trigger price: $27,000
  • Quantity: 0.5 BTC
  • SL trigger price: $22,000
  • Quantity: 0.5 BTC

 

  • If the market price of BTC reaches $26,000, TP/SL order A triggers and closes a position for 1 BTC at the market price. The trader has a 0.5 BTC position (with TP/SL order B still active).
  • If the market price of BTC reaches $24,000, the remaining 0.5 BTC limit order is executed and a new 0.5 BTC TP/SL order C is placed. At the same time, Trader A's position size will increase to 1 BTC and the two TP/SL orders B and C will remain active.

TP/SL order С

  • TP/SL parameters: for part of the position
  • TP trigger price: $27,000
  • Quantity: 0.5 BTC
  • SL trigger price: $22,000
  • Quantity: 0.5 BTC

Why to use TP and SL?

Risk Management 

TP and SL help limit potential losses and gains. If you set a predetermined exit point (SL), you can control the maximum amount you are willing to lose from a trade. TP orders, on the other hand, allow you to lock in profits when the market reaches a desired level and take advantage of favorable market movements.

 

Eliminating emotional bias and maintaining trading discipline

The market is all about emotions. Trading can often be difficult, and emotions can shadow judgment regarding strategy changes. TP and SL orders help eliminate emotional bias by automating your exit strategy. By placing orders prematurely, you can avoid the temptation to deviate from your plan due to fear or other emotional factors. TP and SL help with trading discipline and execution of the trading plan, which is the basis for stable trading in the market.

 

Time Management

TP and SL save time because you don't have to constantly monitor the market with them. Once orders are set, you can focus on other aspects of your trading strategy.

Support

In case of any questions related to the functionality of our exchange, you can:

  • Leave a request on our website;
  • Write to the support email: support@whitebit.com;
  • Write to the chat using the button in the lower right corner of the screen.

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