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.

โš™๏ธ How Stop-Loss Is Calculated

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

๐Ÿ”น 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 โ†’ the trade is closed automatically.

๐Ÿ”น 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 โˆ’ 4%
  • Stop-loss level โ‰ˆ 93.6 USDT

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

๐ŸŽฏ 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

๐Ÿ” 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.

๐Ÿš€ 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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