How to set a stop loss for MEXC contracts

When setting a stop loss for MEXC contracts, consider market volatility, risk tolerance, and contract size to determine the optimal stop loss price and type for your trading strategy.

Nov 11, 2024 at 06:54 am

How to Set a Stop Loss for MEXC Contracts

Introduction

A stop loss is an essential risk management tool for contract traders, allowing traders to automatically close their positions when the market moves against them, limiting potential losses. MEXC, a leading cryptocurrency derivatives exchange, provides a comprehensive range of contract trading options, including advanced stop loss features. This guide will explain the step-by-step process of setting a stop loss for MEXC contracts.

Steps to Set a Stop Loss for MEXC Contracts

1. Select the Contract

Open the MEXC trading platform and navigate to the Contracts section. Select the desired contract from the list of available options. Ensure that you have sufficient funds in your account to cover the initial margin and potential losses.

2. Set the Stop Loss Price

Once you select the contract, the order form will appear on the right-hand side of the screen. Under the "Stop Loss" field, input the desired stop loss price. The stop loss price represents the price level at which the contract will automatically close.

When setting the stop loss price, consider the following factors:
a. Market volatility: Higher volatility requires a wider stop loss to ensure the position is not closed prematurely due to market fluctuations.
b. Risk tolerance: The stop loss price should align with your individual risk appetite. Higher-risk traders may prefer a tighter stop loss, while more conservative traders may opt for a wider stop loss.
c. Contract size: The contract size determines the potential loss per tick movement. A smaller contract size allows for a tighter stop loss without risking significant capital.

3. Choose the Stop Loss Type

MEXC offers two types of stop loss orders:

• Conditional Stop Loss: Triggers a stop loss order only when the contract price touches or exceeds the specified stop loss price.
• Trigger Stop Loss: Triggers a stop loss order immediately when the contract price reaches the stop loss price.

4. Set the Target Price (Optional)

You can optionally set a target price for the stop loss order. The target price represents the price level at which the contract will be closed for profit. If the contract price reaches the target price before the stop loss price, the contract will be closed immediately.

5. Submit the Stop Loss Order

After specifying the stop loss price, type, and optional target price, submit the stop loss order by clicking the "Stop Limit" or "Sell All of Stop Market" button. The order will be placed and executed when the contract price meets the stop loss conditions.

6. Manage the Stop Loss

Once the stop loss order is activated, you can monitor its status in the "Active Orders" section. You can also modify or cancel the stop loss order before it is executed.

7. Consider the Risk

Setting a stop loss does not guarantee that you will avoid losses. The market can move rapidly and may even gap below the stop loss price, resulting in a larger loss. Always trade with caution and only risk capital that you can afford to lose.