Automated tradingUpdated 3 min readBy the FXNOD team
Trading bot stop loss: how it works and how to set it
A trading bot's stop loss is a limit on the total loss of a session: when the running loss reaches the amount you set, the bot stops trading. It should be set as money before you start, enforced somewhere that keeps working if your device is off, and paired with a stake small enough that an ordinary losing streak does not reach it.
Session stop, not trade stop
| Stop loss on a position | Stop loss on a bot session | |
|---|---|---|
| Closes | One trade | The whole run |
| Triggered by | A price level or loss on that trade | The total loss since the run started |
| Needed for | CFDs and multipliers | Any bot, including options bots |
Setting it
Choose the amount as money
What you can lose in this session without it mattering.
Set the stake against it
One to two per cent of the stop loss for a flat stake.
If the stake can grow, check the ladder
The stop loss should cover the ladder you intend to allow, or the ladder can never complete.
Add a profit target
So the session has a second way to end.
Where is it enforced?
This matters more than the number. A stop loss that lives in a browser tab stops working when the tab closes, the laptop sleeps or the connection drops, and the bot may stop too, or may not. A stop loss enforced on a server is checked whatever happens to your device.
Why the loss can pass the stop
Most bots check the limit before placing each trade. If the session is 1 short of the stop loss and the next stake is 10, the trade is placed, and a loss ends the session 9 beyond the limit. With a flat stake the overshoot is at most one stake. With a stake that grows after losses it can be nearly as large as the stop loss itself.
Trailing and daily limits
- A trailing stop on a session locks in part of a profit by moving the limit up as the session gains. Few simple bot tools offer it.
- A daily loss limit across all your sessions is yours to keep. A bot does not know how many runs you have started today.
In FXNOD
A bot cannot be started in Bot Forge or Auto Hub without a stop loss. It is checked on FXNOD's servers before every trade, so it keeps working with the page closed. The check comes before each order, so the last trade can take the session past the stop by up to that trade's stake, and FXNOD also applies a combined loss ceiling across the bots running on one Deriv account.
Questions people ask
- Should a trading bot always have a stop loss?
- Yes. Without one the only limit is the account balance.
- Why did my bot lose more than its stop loss?
- The limit is checked before each trade, so the final trade can exceed it by its stake. A growing stake makes the overshoot larger.
- Does a bot's stop loss work when my computer is off?
- Only if the bot and its limits run on a server. A browser-based bot's limits stop with the browser.
Run a bot that keeps its limits
FXNOD's bots run on its servers and will not start without a stop loss, so your limits hold when your device is off. Build one in Bot Forge or start a ready-made one in Auto Hub, on your Deriv demo account first.
Get started