Capital Management Strategy: How to Use Take-Profit and Stop-Loss in Futures Trading

Take-profit and stop-loss are two of the most important tools for any trader working with perpetual and futures contracts. The take-profit system automatically closes your position when the target profit price is reached, allowing you to lock in gains at the right moment. The stop-loss, in turn, protects against catastrophic losses by triggering when the price falls below the set level.

Why You Need Stop-Loss and Take-Profit in Trading

Risk management is the foundation of long-term success in the market. Without clear exit points, you risk losing accumulated profits or incurring unpredictable losses. Take-profit helps avoid psychological errors of holding a position in hope of further growth, while stop-loss prevents a single bad trade from wiping out a whole week’s worth of trading results.

Modern trading platforms offer flexible solutions for setting these parameters either at the time of opening a position or after the position is already open.

Two Main Modes of Order Placement: Full Position vs Partial Closure

When working with take-profit and stop-loss, you can choose between two strategies:

Closing the entire position at once. In this mode, one TP/SL order manages your entire position. When the trigger price is reached, the entire volume is closed with a single market order. This is suitable for traders who use a single entry point and do not plan to close their position in parts.

Partial closure through multiple orders. Here, you can place multiple take-profit and stop-loss orders for one position, each closing a specific portion of the volume when its trigger price is reached. For example, you opened a position of 1 BTC but plan to close: 0.3 BTC at $26,000, 0.4 BTC at $28,000, and the remaining 0.3 BTC at $30,000. Each such order triggers independently, allowing you to optimize your average exit price and reduce missed profits.

Key Differences of the Updated TP/SL System

The updated versions of take-profit and stop-loss management systems offer significant improvements:

More triggers. Previously, an order triggered only based on the asset’s price, but now you can set triggers based on ROI (percentage return), price change in percentage, or P&L (absolute profit/loss in USDT). This is especially useful for traders who want to lock in profits relative to their investments rather than absolute price levels.

Mixed order types. The new system supports both conditional market orders (triggered at the nearest available price) and conditional limit orders (triggered at your specified price). This provides greater control: a market order guarantees quick execution, while a limit order allows you to get a better price if the market moves in your favor.

Flexible management when changing the position. If you add volume to a position via a new order with its own TP/SL parameters, the system automatically adjusts the sizes of the orders considering the new total volume. When reducing the position through partial closure, TP/SL orders are proportionally decreased in volume.

Practical Scenarios for Using Take-Profit and Stop-Loss

Scenario 1: Scaling out profits

Suppose the current BTC price is $25,000. You opened a long position of 1 BTC and simultaneously created three orders:

• First take-profit triggers at $26,000 for 0.5 BTC (market order)
• Second take-profit triggers at $30,000 for 0.5 BTC (limit order at $30,500)
• Stop-loss set at $23,000 for the entire position

When the price reaches $26,000, the first half of the position closes automatically. If later the price drops to $23,000, the stop-loss triggers for the remaining 0.5 BTC. If the price continues to rise and hits $30,000, the second order triggers, closing the remaining 0.5 BTC.

Scenario 2: Adding to a position with new parameters

You already hold 1 BTC with a take-profit at $26,000. Then, the price drops to $24,000, and you decide to add another 1 BTC via a limit buy order, setting separate TP/SL parameters ($27,000 TP and $22,000 SL) for this new volume.

In this case, the system treats each set of orders independently: the old parameters remain for the first BTC, and the new parameters apply to the second BTC. If the new order executes, your total position becomes 2 BTC, but the stop-loss is adjusted according to the actual position.

Scenario 3: Replacing parameters when increasing the position

If you place only a stop-loss for the entire position (without a take-profit), and then add volume with a new stop-loss, the old order is canceled, and the system sets a new stop-loss applicable to the increased volume. This prevents accidental triggering of outdated parameters.

Technical Nuances to Understand

Relation to liquidation price. A stop-loss set too close to the liquidation price may not trigger because the system considers liquidation as a critical event. When using maximum leverage (e.g., 100x for BTC), the required maintenance margin can be exactly 50% lower than the initial margin, causing the stop-loss price to coincide with the liquidation price. In this case, liquidation occurs first.

Execution under margin deficit. In rare cases, the system may refuse to execute a stop-loss if the best available prices in the order book are worse than needed to cover the losses. Instead, the position will be automatically liquidated to cover the deficit with the insurance fund.

Use of marking price. For triggering both liquidation and stop-loss, the system uses the marking price (not the last trade price) to avoid manipulation through small-volume spikes.

Frequently Asked Questions About the System

Where can I track my active TP/SL orders?

Current unfilled take-profit and stop-loss orders are in the “Current Orders” section for derivatives. The history of executed and canceled orders is available in the “Order History” section.

Can the total of all partial TP/SL orders exceed the position size?

Yes, you can specify a larger total volume for multiple TP/SL orders in partial close mode. The system will execute each order for the specified amount or until the position is fully closed, whichever comes first. Opposite positions will not be opened.

Why was my position liquidated despite having a stop-loss set?

Main reasons: the stop-loss was set below the liquidation price, or executing the stop-loss would cause margin deficit (order book shows prices worse than the liquidation price). In such cases, the system activates liquidation instead of the stop-loss.

What happens if my position exceeds the maximum size per order?

The system automatically splits TP/SL into multiple orders of the maximum allowed size. For example, if you hold 1000 BTC but the max per order is 100 BTC, the system will send orders of 100 BTC each sequentially. When trading with a single account, this process is limited to 6 attempts; after that, the remaining volume must be closed manually.

Can there be a time gap between the TP trigger and the cancellation of the stop-loss?

No. The system treats a set of one take-profit and one stop-loss as a single unit. When the TP trigger is reached, the corresponding stop-loss is canceled simultaneously, even if the limit order for the take-profit has not yet been filled in the order book. If you want to keep the stop-loss after the take-profit triggers, set them separately.