> ## Documentation Index
> Fetch the complete documentation index at: https://docs.limora.finance/llms.txt
> Use this file to discover all available pages before exploring further.

# Stop-Loss & Take-Profit

> Automated risk management with conditional orders

Stop-loss and take-profit orders automatically close your position when price reaches specified levels, helping you manage risk and lock in profits.

***

## Overview

<CardGroup cols={2}>
  <Card title="Stop-Loss" icon="shield-halved">
    Closes your position to limit losses when price moves against you.
  </Card>

  <Card title="Take-Profit" icon="circle-check">
    Closes your position to lock in gains when price reaches your target.
  </Card>
</CardGroup>

These orders are set when opening a trade and execute automatically without requiring you to be online.

***

## How They Work

### Stop-Loss

A stop-loss order triggers when the oracle price reaches your specified level:

<Tabs>
  <Tab title="Long Position">
    Stop-loss is set **below** your entry price. **Example:** - Entry: $50,000 -
            Stop-Loss: $48,000 - If price falls to \$48,000, position closes
    automatically - Loss limited to \~4% of position size
  </Tab>

  <Tab title="Short Position">
    Stop-loss is set **above** your entry price. **Example:** - Entry: $50,000 -
            Stop-Loss: $52,000 - If price rises to \$52,000, position closes
    automatically - Loss limited to \~4% of position size
  </Tab>
</Tabs>

### Take-Profit

A take-profit order triggers when the oracle price reaches your target:

<Tabs>
  <Tab title="Long Position">
    Take-profit is set **above** your entry price. **Example:** - Entry: \$50,000

    * Take-Profit: $55,000 - If price rises to $55,000, position closes
      automatically - Profit of \~10% of position size secured
  </Tab>

  <Tab title="Short Position">
    Take-profit is set **below** your entry price. **Example:** - Entry: \$50,000

    * Take-Profit: $45,000 - If price falls to $45,000, position closes
      automatically - Profit of \~10% of position size secured
  </Tab>
</Tabs>

***

## Setting Stop-Loss & Take-Profit

### When Opening a Trade

<Steps>
  <Step title="Configure Position">
    Set your trading pair, direction, collateral, and leverage.
  </Step>

  <Step title="Enable Stop-Loss">
    Toggle on the Stop-Loss option and enter your price level.
  </Step>

  <Step title="Enable Take-Profit">
    Toggle on the Take-Profit option and enter your target price.
  </Step>

  <Step title="Review">
    The order summary will show: - Distance to stop-loss (% and $) - Distance to
            take-profit (% and $) - Potential loss at stop-loss - Potential profit at
    take-profit
  </Step>

  <Step title="Submit">
    Your stop-loss and take-profit are included with the trade.
  </Step>
</Steps>

### Modifying Active Orders

To change stop-loss or take-profit on an open position:

1. Go to your active positions
2. Click the edit icon next to the position
3. Adjust your stop-loss or take-profit levels
4. Confirm the modification

<Note>Modifications require a small gas fee for the on-chain update.</Note>

***

## Strategic Considerations

### Setting Stop-Loss Levels

<AccordionGroup>
  <Accordion title="Technical levels">
    Place stops below support (for longs) or above resistance (for shorts).
    Avoid obvious round numbers where many stops cluster.
  </Accordion>

  <Accordion title="Percentage-based">
    Set a fixed percentage loss you're willing to accept (e.g., 5% of position).
    Consistent risk per trade.
  </Accordion>

  <Accordion title="Volatility-based">
    Use ATR (Average True Range) to set stops. Higher volatility = wider stops to
    avoid being stopped out by noise.
  </Accordion>

  <Accordion title="Above liquidation">
    Always set stops well above your liquidation price. A stop at -8% is better
    than liquidation at -9%.
  </Accordion>
</AccordionGroup>

### Setting Take-Profit Levels

<AccordionGroup>
  <Accordion title="Risk-reward ratio">
    Set take-profit to achieve at least 1:2 risk-reward. If risking 100 USDC to
    stop, target 200 USDC profit.
  </Accordion>

  <Accordion title="Resistance/support levels">
    Target key technical levels where price historically reversed. These provide
    natural exit points.
  </Accordion>

  <Accordion title="Trailing approach">
    Consider moving take-profit higher as the trade moves in your favor to capture
    extended moves.
  </Accordion>

  <Accordion title="Multiple targets">
    When partial close is available, consider multiple take-profit levels to
    scale out of winning trades.
  </Accordion>
</AccordionGroup>

***

## Example Scenarios

### Scenario 1: Disciplined Long Trade

```
Setup:
- Entry: $50,000
- Collateral: 100 USDC
- Leverage: 10x
- Position Size: 1,000 USDC
- Stop-Loss: $48,000 (-4%)
- Take-Profit: $54,000 (+8%)

Outcomes:
A) Price hits take-profit → Profit: $80 (80% return)
B) Price hits stop-loss → Loss: $40 (40% loss)
C) Risk-Reward Ratio: 1:2 ✓
```

### Scenario 2: High Leverage Short

```
Setup:
- Entry: $3,000
- Collateral: 50 USDC
- Leverage: 50x
- Position Size: 1,000 USDC
- Stop-Loss: $3,060 (+2%)
- Take-Profit: $2,880 (-4%)

Outcomes:
A) Price hits take-profit → Profit: $40 (80% return)
B) Price hits stop-loss → Loss: $20 (40% loss)
C) Risk-Reward Ratio: 1:2 ✓
```

***

## Important Considerations

### Execution Price

Stop-loss and take-profit orders execute at the **oracle price** when triggered, not necessarily at your exact set price:

* In normal conditions, execution is very close to your level
* In fast markets, there may be slight slippage
* Orders queue for execution and settle on the next oracle update

### Gas Requirements

Ensure your wallet has enough ETH for:

* Opening the trade (includes setting SL/TP)
* Any modifications to SL/TP levels
* Potential manual close

### No Guarantee Against Gaps

In extreme market conditions (flash crashes, exchange outages):

* Price may gap through your stop-loss
* Execution may occur at a worse price
* Liquidation may occur before stop-loss in severe cases

<Warning>
  Stop-losses reduce risk but don't eliminate it. Never trade with money you
  can't afford to lose.
</Warning>

***

## Best Practices

<AccordionGroup>
  <Accordion title="Always use a stop-loss">
    Never open a leveraged trade without a stop-loss. Decide your max loss
    before entering.
  </Accordion>

  <Accordion title="Don't set stops too tight">
    Stops too close to entry will get triggered by normal market noise. Give
    trades room to breathe.
  </Accordion>

  <Accordion title="Move stops to break-even">
    Once a trade is profitable, consider moving your stop-loss to your entry price
    to eliminate risk.
  </Accordion>

  <Accordion title="Don't widen stops on losing trades">
    If your stop is about to hit, accept the loss. Moving stops further away
    usually leads to bigger losses.
  </Accordion>

  <Accordion title="Set and forget">
    Trust your original analysis. Don't constantly adjust stops based on
    emotion.
  </Accordion>
</AccordionGroup>

***

## Troubleshooting

<AccordionGroup>
  <Accordion title="Stop-loss didn't trigger">
    * Verify the price actually reached your stop level on the oracle (not just
      on exchanges) - Check that your position is still open - In extreme
      volatility, execution may be delayed
  </Accordion>

  <Accordion title="Executed at different price">
    Oracle price at execution may differ slightly from your set level, especially
    in fast markets. This is normal behavior.
  </Accordion>

  <Accordion title="Can't modify stop-loss">
    * Ensure you have ETH for gas - The position must still be active - Try
      refreshing the page
  </Accordion>
</AccordionGroup>

***

## Next Steps

<CardGroup cols={2}>
  <Card title="Fees" icon="receipt" href="/trading/fees">
    Understand all trading costs.
  </Card>

  <Card title="Trading Overview" icon="chart-line" href="/trading/overview">
    Review trading fundamentals.
  </Card>
</CardGroup>