# Stop Loss

A Stop-Loss (SL) order automatically closes your position when the market moves against you and reaches your defined loss threshold. It’s designed to help you manage risk and limit potential losses.

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#### Trigger Conditions

A Stop-Loss order is activated when your selected trigger price source — Latest, Mark, or Index — reaches or exceeds the stop price you set.

* Long (Sell) → Triggered when the market price falls to or below your stop price.
* Short (Buy) → Triggered when the market price rises to or above your stop price.

Once triggered, the Stop-Loss order converts into either a Market or Limit order based on your chosen execution type.

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#### Execution Types

**Stop-Market Order**

* Once triggered, the order converts to a market order, executing immediately at the best available price.
* The execution price may differ from your stop price due to slippage or price gaps, particularly in fast-moving markets.
* Partial fills may occur depending on liquidity at the time of execution.

**Stop-Limit Order**

* Once triggered, the order becomes a limit order at your specified limit price.
* Provides price control, but execution is not guaranteed — if the market continues to move away from your limit price, the order may remain unfilled and fail to provide stop-loss protection.

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#### Parameter Recommendations

| Long (Sell) | Trigger Price ≥ Limit Price | Setting the limit price slightly below the trigger price increases the chance of execution during downward movement. |
| ----------- | --------------------------- | -------------------------------------------------------------------------------------------------------------------- |
| Short (Buy) | Trigger Price ≤ Limit Price | Setting the limit price slightly above the trigger price increases the chance of execution during upward movement.   |

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**Tip**: Adding a small “spread” between your trigger and limit prices helps improve execution reliability while maintaining price control.
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#### Trigger Price Source

Choose which price source triggers your Stop-Loss order:

* **Mark Price**  — Reduces the chance of false triggers caused by short-term price spikes.
* **Last Traded Price** — More sensitive to rapid market movements but may trigger early during volatility.
* **Index Price** — Reflects an aggregated market rate and offers stability during abnormal price fluctuations.

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#### Risk Reminder

* During extreme volatility, Stop-Market orders may execute far from your trigger price.
* Stop-Limit orders may fail to execute if the market price moves past the limit price too quickly.
* In both cases, your position may remain open longer than expected, increasing potential losses.
* For most users, Mark Price triggers offer the best balance between stability and timely activation.

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### 👉**For details on how to set a stop loss order, please refer to**[ **this page.**](https://support.backpack.exchange/exchange/futures#how-to-correctly-set-take-profit-and-stop-loss-orders-for-open-positions)

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