Tips for Setting Stop Loss on Perpetuals

I trade BTC, ETH, and ASTER on Perpmate DEX, and they just recently added stop loss and take profit features. I never really used stop loss before, only take profit. Sometimes the price bounces back and I didn’t get fully liquidated, but when I try to use stop loss, I'm usually losing money. It tends to get triggered too early or set way too close to liquidation. How do you all set your stop loss? What strategies work for you? Thanks!

Hmmm......i think some Strategies that could help for Perpetual Stop Losses.. You should Allow your trade some leeway and also Determine size Also Consider funding rates.

Everyone has a different trading style and strategy. Personally, when trading perps, I prefer trending markets and then my stop loss is usually at a price a little bit away from the previous lower high or higher low. Certain times I set is just below the support level or above the resistance level depending on whether I opened a short or long position. I also involve some risk reward ratios in SL and TP, my most preferred is 2:1 I am not saying that my trades are perfect but are enough to keep me going without completely blowing off my account

I know that Perpmate is a decentralized platform that differs from our regular standard exchange like Binance, Bybit.   Therefore, some of the best risk management practices to set up a stop loss when trading on DEX, revolves around knowing how to set up the stop price based on tech support and not based on the fact you see a round number. It is also a good practice to observe and pay attention to the market price and index price because on a decentralized exchange stop loss could be triggered based on the DEX price at the moment, rather than the average price available on other exchanges. Lastly, try to toggle the reduce only option always as part of being careful, so as to prevent new positions that are not deliberately set.

Well, without SL, you are vulnerable to liquidation. I don't think it is a good idea to not use stop loss unless you are trading on isolated margin, which can prevent you from losing all of your funds once you hit liquidation with your current position. Actually, setting up the stop loss is also my issue because sometimes it hits before it goes to what I predicted. Currently the only solution that I applied is to reduce my RR risk-reward ratio to 1:1, meaning I have a higher stop-loss, but that 1:1 ratio is not stable. If the price hits my first TP, I take 25% of my position and adjust the stop-loss to break even and continue to hold it. Since my strategy is swing trading, I don't want to miss those trends if the price continuously follows the trend until my stop-loss hits. That's the only thing that makes me more profit than just sticking to 1:1, but that's my safe way to avoid an early stop-loss hit.

Using stop loss is very important to me, it doesn’t matter how perfect and good you are with the charts without hitting the stop loss, when you don’t put the stop loss, you’re at more chance of being liquidated. It is better to trade today and tomorrow than to not trade for a long term due to liquidation on your asset after investing them into trading. Trading is very risky and also very volatile, so without playing stop loss make you to be at risk of losing a lot of money. Don’t think because you don’t put stop loss you’ll not lose again, you’re at the liberty of just getting it right now and when things turn around, you may witness it for the worst and wished you’re used to using stop loss from onset.

I read some article few days ago that said our stop loss might be other people's limit buy. That sentences actually summarize current perp market and for most of the manipulation ridden market especially a b-book prep market where exchange acts as counterparty. The liquidity hunting is pretty obvious and if you follow herd mentality of putting stop loss just like anyone else you can get liquidated. My recommendation is to trade small and put a stop loss in a place where the counterparty can't easily liquidate you without having to go through massive orders to eat through the big order walls. That way you won't get your SL triggered easily.

A good approach is to base your stop loss on market structure rather than a fixed percentage, placing it beyond a clear support or resistance level where your trade idea is invalidated, not just where price might briefly wick. Use smaller position sizes so you can afford wider, more logical stops without being near liquidation, and aim for at least a 1:2 or 1:3 risk to reward so a few stopped trades don’t wipe out your gains. You can also try a partial take profit + breakeven stop after price moves in your favor, which protects capital while still giving the trade room to run.

If do you think that using a stop loss and take profit is not in your game with trading, you can do that. Its just a safety measures to the traders offered by the exchange so you dont need to monitor your trades and the market, they can leave their position and when it hit the it will automatically close the position without too much wasting time and energy in the market. Now if you are active on the chart you can not use the TP/SL feature because its on your risk management until where and when you are willingly to burn or hold just to take profit.

You sounded as if you are trading on DEX and a new exchange for that matter.. To me I hardly make use of decentralized exchange  instead of centralized exchange could be more better to trade on, but I think there should be steps to follow on that exchange to help you control your loses while trading. The most reason why I do not use decentralized exchange is because of wallet connection and phishing link that could easily compromised my account, which is very bad and mostly I do actually advised people not to use original wallet to connect with any decentralized exchange or site just to avoid how they could easily get piped.

Stop loss on trading is usually used by traders who trades with bots and does not have much time to spend tracking their trades. So they believes once the lose reaches the set limit, the bot automatically closes the trade. Manual traders though uses the stop loss strategy because it cuts short excessive looses that the trader could bear. Avoiding the stop loss will be termed a very high risk which could be triggered by greed or ignorant to understand that in trading, you must figure when exit and hope to resume next time.

Perhaps everyone will have a different approach. However, I personally have a method for setting stop losses. If I am in a long position, I set it at the last swing low or below a strong support level. This is because if a strong support level is broken, further declines will usually occur. Therefore, setting a stop loss there is quite effective for me. However, this can only be done after we are prepared to accept the risk of loss in that area. Or if our liquidity point is far enough away. Or if we are not in a scalping position. However, in scalping trading, we must apply it in a different way. That is, by determining the percentage of loss that we are prepared to bear.

As a rule, a stop loss is set above the resistance level if you open a short position and, accordingly, when opening a long position, you need to set a stop loss below the support level. But in order for the loss to be minimal when a stop loss is triggered, it is necessary to open an order closer to these levels, and not in the middle of the trading channel.