How does stop-loss work for volatility auto-trades?

The Stop-Loss (SL) in volatility auto-trading is a percentage-based protection mechanism that automatically closes a trade if price moves against your position beyond a defined limit.

It is designed to protect capital during extreme and chaotic market conditions.

⚙️ How Stop-Loss Is Calculated

The stop-loss level depends on whether DCA (Dollar-Cost Averaging) is enabled.

🔹 1. If DCA is Disabled

  • Stop-loss is calculated from the initial entry price.
  • The percentage is applied directly to the first order price.

Example:

StopLoss:
  Enabled: true
  StopLossPercent: 4
  • Entry price: 100 USDT
  • Stop-loss: 4%
  • SL level: 96 USDT (for long position)

If price hits 96 → the trade is closed automatically.

🔹 2. If DCA is Enabled

  • Stop-loss is calculated from the average entry price.
  • The average entry adjusts whenever new DCA orders are filled.
  • The stop-loss level moves accordingly.

Example:

  • Initial long entry: 100 USDT
  • DCA entry: 95 USDT
  • New average entry: 97.5 USDT

With 4% stop-loss:

  • SL = 97.5 − 4%
  • Stop-loss level ≈ 93.6 USDT

This ensures risk is calculated based on the true blended position cost, not just the first order.

🎯 Why This Matters

Volatility trades can move aggressively and unpredictably. A properly calculated stop-loss:

  • Prevents unlimited downside
  • Automatically exits losing trades
  • Maintains structured risk management
  • Works independently from MaximumHoldTime

When DCA is enabled, using the average entry price ensures:

  • Fair risk measurement
  • Accurate capital protection
  • Logical exit calculation after scaling in

🔁 Behavior for Short Positions

For short trades:

  • Stop-loss is placed above entry (or average entry).
  • If price rises by the defined percentage, the trade closes automatically.

🚀 Summary

Stop-loss in volatility auto-trades:

  • Is percentage-based
  • Automatically closes losing trades

  • Uses:

    • Initial entry price (DCA disabled)
    • Average entry price (DCA enabled)
  • Protects capital during extreme market conditions

It ensures volatility trading remains controlled, structured, and risk-managed.

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