1. Did You Use a Stop Loss Timeout?
The stop loss timeout requires the price to stay below your stop level for a specified duration before triggering. While this feature helps avoid unnecessary stops during brief price fluctuations, it comes with risks:
Delays: If the timeout is too long, the trade might close at a much lower price than expected.
Not Recommended with Limit Stop Loss: When combined with a limit stop loss, the price might drop far below your limit order price before the timeout expires, leading to the stop loss being skipped entirely.
2. What Exchange Are You Trading On?
Futures DCA bots now support Native Stop Loss on the following exchanges:
Binance Futures (USDT-M, COIN-M)
Bybit Futures (USDT Perpetual, Inverse Perpetual)
Gate.io Futures
Benefits of Native Stop Loss:
The stop loss order is placed directly on the exchange alongside limit take profit orders (excluding trailing take profit).
This ensures faster execution during high market volatility with no delays.
Important
Native Stop Loss is currently available only on Futures accounts and not on Spot accounts.
If the exchange prevents the bot from placing a Native Stop Loss, the order will be processed as usual by 3Commas.
3. Are You Using Trailing Stop Loss?
If your trade closes earlier than expected, the Trailing Stop Loss (TSL) may be the reason.
TSL dynamically adjusts the stop loss level as the price peaks.
As the price rises (or drops for short trades), the stop level moves closer to the current price, potentially triggering the stop loss sooner than expected.
For more details, refer to the article explaining how Trailing Stop Loss works to decide if it’s suitable for your trades.
4. Did the Price Change Suddenly?
A sharp price rise or drop can affect the performance of your stop loss type:
Market Stop Loss: Executes at the best available price but can result in unfavorable outcomes during rapid price changes.
Limit Stop Loss: May fail to execute if the price moves too quickly past your stop price.
Understanding Market Orders:
Market orders prioritize speed over price control, which means they execute at the "best available price," even if it’s unfavorable. Learn more about the differences between market and limit orders in this article.
5. Are You Using a Limit Stop Loss?
A limit stop loss consists of two key components:
Stop Price: The trigger price at which the limit order is placed.
Order Price: The price at which the limit order enters the order book after the stop price is reached.
How to Prevent Limit Orders from Being Skipped:
For short positions (e.g., Smart Cover):
Set the order price slightly higher than the stop price.
For long positions (e.g., Smart Trade):
Set the order price slightly lower than the stop price.
Avoid These Mistakes:
Order Price = Stop Price: The order may be skipped during fast price moves.
Order Price Higher/Lower Than Stop Price: For long trades, an order price higher than the stop price requires a price bounce to fill the limit order, which may never happen. Similarly, for short trades, a lower order price risks the same outcome.
By following these guidelines, you can improve the reliability of your stop loss and reduce unexpected outcomes.
Understanding the behavior of stop loss types and exchange-specific features can help you avoid future issues. Adjust your strategies based on the trading environment and market volatility.