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Why my stop loss didn't work?

Understand why your trade didn't close by stop loss or closed incorrectly. Learn what to change to prevent it from happening again.

Updated over 4 months ago

Do you use the stop loss timeout?

When the stop loss timeout is active, the price should remain below your stop level for X minutes. Consider the delay carefully as there's no universal value for all situations, even on the same pair. If you set a long delay, the trade might close much lower. 

Don't use the stop loss timeout with limit stop loss. After the time out, the price can be much lower than your limit order price, and your stop loss will often end skipped.

What exchange are you trading on?

Futures DCA bots can now place Native Stop loss! This feature is available for the following exchanges:

  • Binance Futures (USDT-M, COIN-M)

  • Bybit Futures (USDT perp., Inverse perp.)

  • Gate.io Futures

It means that the Stop loss order will be placed directly on the exchange along with the Limit Take profit orders (excluding the Trailing Take Profit order), and in case of high market volatility, your Stop loss will be processed right on the exchange fast and with no delays!

It currently works only on the Futures accounts listed below and not on Spot accounts, yet.

If, for some reason, the exchange does not let the bot place a Native Stop loss, it will be processed as usual by 3Commas.

Do you use Trailing Stop Loss?

That will be the reason if your trade closes earlier than you expect. The trailing feature moves the stop level after the price peaks, so the stop loss price eventually changes more and more. 

This article explains how the Trailing Stop Loss works, please check it and reconsider if you want to use TSL for further trades.

Did the price take a sharp rise or drop?

When the price drops or rises very fast, a market stop loss might execute at worse prices, and the limit stop loss might not execute at all. 

Check the next section to find out more about limit stop losses.

Market orders are there to buy or sell something as fast as possible at the best available price right now. When the price changes very fast, the term "the best available price" can be equal to "the worst price."

Do you use a limit order for stop loss?

The limit stop loss order consists of two parts:

  1. The stop price is the price to determine when to place the limit order.

  2. The order price is the price of the limit order that goes to the order book when the coin price reaches your stop price. 

The limit order allows you to control the worst price you're willing to sell or buy your coins, but it also should be filled. The order is likely to be stuck on the exchange's order book if the price doesn't reach it or moves fast through your stop level. To prevent the limit order from being stuck:

  • Set the order price a bit higher than the stop price for short positions (Smart Cover).

  • Set the order price a bit lower than the stop price for long positions (Smart Trade, Smart Sell).

Don't set the order price higher than stop price for long positions or lower than stop for short trades. When you do this, the price should take additional bounce to reach and fill your limit order, which means it'll often be skipped.

Also, if you set the order price equal to the stop price, the price might skip your order on fast moves. 

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