How to Achieve Stable Profits in Perpetual and Futures Contracts Using Take Profit and Stop Loss Mechanisms

In cryptocurrency trading, how to effectively manage trading positions and ensure profits is a core skill every trader must master. Take profit (TP) and stop loss (SL) orders provide traders with powerful risk control tools, allowing them to automatically lock in gains during market fluctuations and prevent significant losses. The combination of these two tools forms an indispensable position management system in modern trading.

From Concept to Practice: Understanding Take Profit and Stop Loss Tools

In the world of trading, there are two key moments for profit realization: one is deciding when to take profits, and the other is determining when to cut losses. Take profit orders can automatically close positions when the price reaches your target level, preventing greed from causing you to miss out on secured gains. Conversely, stop loss orders exit immediately when the price falls to a set level, strictly controlling your losses within expected limits.

This upgraded dual protection mechanism allows traders to set multiple TP and SL orders simultaneously, managing different parts of the same position. You can choose to set a single protection for the entire position or manage risk in stages—taking partial profits at lower targets and expecting further price increases to realize additional gains at higher levels.

The Core Differences Between Two Position Management Methods

Modern trading platforms offer two distinctly different ways to apply TP and SL mechanisms:

Overall Position Protection Mode is the most straightforward. When your target price is hit, the entire position is immediately closed at market price. This method suits traders who prefer a one-size-fits-all approach and want to avoid overly complex setups. Regardless of your position size, you only need to set one TP/SL level, and everything exits when triggered.

Partial Position Management Mode offers greater flexibility. You can set multiple trigger points for the same position, each specifying different exit quantities. This enables a “gradual profit-taking” strategy—selling different amounts of the position at various price levels as BTC rises, locking in partial profits while still participating in further upside. In this mode, a single TP or SL trigger does not affect other protection orders, providing more granular risk management control.

Advantages of Management Upgrades

Compared to traditional single TP/SL setups, modern position management systems bring significant improvements:

Enhanced Flexibility: Moving from a requirement to set a unified target for the entire position to the ability to configure global protections or customize for each order or position segment. This grants traders unprecedented control.

Diverse Trigger Mechanisms: While older systems only supported price-based triggers, newer systems support triggers based on ROI percentage, absolute P&L, and more. Some traders prefer to monitor returns, others focus on actual cash gains—now both are possible.

Order Execution Diversity: You can set TP triggers to use limit orders instead of only market orders. This allows you to aim for more favorable exit prices rather than being forced to accept the current market price.

Position Adjustment Compatibility: When you increase or decrease position size, these protection orders automatically adjust their protective ranges, ensuring new position parts are also covered under risk management.

Practical Scenarios: From Theory to Operation

Scenario A: Practical Use of Multi-Level Profit Strategy

Imagine you are bullish on Bitcoin. The current market price is $25,000. You decide to buy 1 BTC with a staged profit-taking approach:

First, set a TP at $26,000 to sell 0.5 BTC. This is not for stop loss but to lock in early profits, executing automatically once reached.

Second, set another TP at $30,000 with a limit order at $30,500 to sell the remaining 0.5 BTC. If the market reaches $30,000, you can get a better price at $30,500.

At the same time, set an overall position stop loss at $23,000 to limit potential losses if your market view is wrong.

Market evolution example:

• When price rises to $26,000, the first TP triggers, selling 0.5 BTC at market price—profit secured. The remaining 0.5 BTC is still protected by other orders.

• Suppose the price continues upward but then fluctuates; you manually close 0.1 BTC. You now hold 0.4 BTC. Other protection orders continue to safeguard the remaining position.

• When the price hits $30,000, the second TP triggers, placing a limit order at $30,500. If the price reaches $30,500, your remaining 0.4 BTC is sold at that price—exceeding expectations! The overall position stop loss is automatically canceled since the entire position is closed.

• Conversely, if the price drops back to $23,000, the overall stop loss triggers, selling the remaining 0.4 BTC at market price, and the limit order is canceled.

This scenario demonstrates how modern position management allows traders to chase profits while keeping losses within controlled limits.

Scenario B: Impact of Subsequent Orders on Existing Protections

Sometimes, traders change their plans or market conditions differ from expectations, requiring additional positions.

Suppose you hold a long position of 1 BTC, with a TP set at 0.5 BTC at $26,000. When the price drops from $25,000, you see it as a rebound and want to add at a lower price. You place a limit buy order at $24,000 for 1 BTC, with new TP at $27,000 and SL at $22,000, each for 1 BTC (covering the new purchase).

If the $24,000 order executes, your total position becomes 2 BTC. The new 1 BTC gets its own protection orders: TP at $27,000 and SL at $22,000. These protections operate independently of the original position’s protections.

Scenario C: Upgrading Stop Loss for Better Risk Management

Sometimes, market moves contrary to your initial plan, and you want to adjust your risk tolerance.

Suppose you hold 1 BTC long, with an initial overall SL at $20,000. Later, you add 0.5 BTC at a new SL of $18,000. After the new order executes, the original $20,000 SL is canceled, and the new $18,000 SL becomes the protection for the larger combined position.

This may seem like lowering your stop threshold, but it reflects an updated market view and risk appetite based on new position sizes.

Automatic Adjustment Mechanisms When Position Changes

When increasing positions: The protection orders for each part of the position remain unchanged in quantity but the overall protective range expands. The system intelligently adjusts the protection coverage based on the new total position size.

When decreasing positions: The system adjusts protection orders according to your initial setup, prioritizing the earliest protection orders to match the reduced position size.

Maximum order size limits and solutions: If a single order exceeds the maximum allowed size on the exchange, the system will automatically execute in batches—first part at the maximum allowed size, then subsequent parts until the entire position is closed. During this multi-batch process, the already closed parts are protected, but remaining parts still face market risk and potential forced liquidation.

Common Questions and Professional Answers

Q: How can I track all my current TP/SL orders?
A: For untriggered TP/SL orders, you can view them in your current order records. For triggered, partially filled, or canceled orders, the history logs keep a complete record for review.

Q: Why does the sum of partial position TP/SL quantities sometimes exceed my actual position size?
A: This is normal and safe. The system allows setting multiple TP/SL for parts of the position, with total quantities exceeding the actual position. When these orders trigger, execution is based on the minimum of your set quantity and remaining position. Excess orders are automatically canceled, preventing reverse positions.

Q: Why does my stop loss price coincide with the forced liquidation price under high leverage?
A: This reflects the mathematical nature of extreme leverage. For example, at 100x leverage, initial margin is 1%, maintenance margin is 0.5%. The maintenance margin is 50% of initial margin, meaning a 50% loss triggers forced liquidation. Therefore, your 50% stop loss price equals the liquidation price—this is not a system flaw but a consequence of leverage.

Q: Why does the system allow me to set stop loss beyond the liquidation price?
A: The exchange’s design respects trader autonomy. Each trader has their own strategy and risk tolerance. The system does not impose strict limits but requires careful checking of your settings to ensure they match your intentions. Stop losses set below the liquidation price may not trigger effectively but are allowed as a choice.

Q: What happens if my stop loss is set below the forced liquidation price?
A: Such stop losses may never trigger because your position is already liquidated before reaching that level. Once liquidation occurs, related stop loss orders are automatically canceled.

Q: Why is my position liquidated despite setting a stop loss?
A: Common reasons include: the stop loss price is set unreasonably, or the trigger reference price (like the mark price) differs from the last traded price. The mark price is used to calculate liquidation and may differ from the last trade, leading to unexpected liquidations.

Q: Even if my stop loss is below the liquidation price, why is my position still liquidated?
A: In markets with very low liquidity, if the order book lacks suitable buy/sell orders at your stop loss price, executing your stop loss order can cause larger losses—potentially exceeding your margin. To prevent negative account balances, the system may execute a forced liquidation instead of risking a larger deficit.

Q: Why do I see my position liquidated even though the mark price hasn’t reached my liquidation level?
A: Liquidation is based on the mark price, not the last trade price. The mark price is calculated via an index to prevent market manipulation during extreme volatility. Sometimes, it exceeds the last traded price, causing liquidation even if the chart suggests otherwise.

This comprehensive position management system combines profit pursuit with risk control, enabling traders to handle various market scenarios systematically. By understanding these mechanisms and applying them consistently, you can build a robust trading system that maximizes profits while protecting your capital.