Risk management is not just about setting stop losses — it's about knowing how to effectively combine the right tools. This week, let's explore 2 core factors:

🔸 Breakeven Price: accurately determines the price at which a trade neither makes a profit nor a loss.

🔸 Trailing Stop Orders: automatically adjust according to market fluctuations to lock in profits and limit losses.

Mastering these tools will help you control your Futures strategy more effectively.
Let's explore in detail 👇

P1

Breakeven Price & Trailing Stop Orders: Smarter Futures Position Management
Learn how Breakeven Price and Trailing Stop Orders can help you build exit strategies, protect profits, and minimize emotional decision-making.

P2

What is the Breakeven Price in Futures trading?
The breakeven price of a position is the price at which that position generates neither profit nor loss. If the market price equals the breakeven price, you will neither gain nor lose.

🔸 Formula:
Breakeven Price = (Total Position Cost – Total Profit from Position) / Current Position Size

🔸 The significance of Breakeven Price:
When trading Futures, quickly visualizing the breakeven price helps you:

  • Understand the level of risk being taken,

  • Assess trading effectiveness,

  • Adjust the strategy accordingly.

💡 For more details and calculation examples, visit the Binance Support Center by searching for “Breakeven Price”.

P3

How to view the Breakeven Price on Binance Futures (Binance app):

🔸 Step 1: Log in to the Binance app, go to [Futures]. Click […] in the top right corner and select [Display Options].
🔸 Step 2: Select [Position Display Mode] → [Detailed Mode].
🔸 Step 3: Go to an open position, click [Entry Price]. A pop-up window will show the breakeven price for that position.

⚠️ Note: The breakeven price in Futures is only theoretical. Actual results may vary due to slippage, trading fees, funding fees, or market volatility.

P4

What is a Trailing Stop Order?
A Trailing Stop Order automatically adjusts the stop price according to favorable market trends, helping to limit losses and lock in profits. Unlike a regular stop loss, this order follows the trend without resetting during minor adjustments.

🔸 Key Parameters:

  • Callback Rate: the percentage that allows the price to reverse (0.1%–10%).

  • Activation Price: the price that triggers the order. If not set, the system will take the market price of the selected activation price type.

  • For a trailing stop sell (long) order, the activation price must be higher than the market price.

  • For a trailing stop buy (short) order, the activation price must be lower than the market price.

  • Trigger Type: you can choose 'Last Price' or 'Mark Price'. If 'Mark Price' is selected, the order will activate when the mark price reaches the activation price (note the price difference).

P5

How does a Trailing Stop Order work?

Typically, traders set trailing stops after opening positions to manage risk and protect profits.

🔸 For a Long position: set the trailing stop sell below the market price. As the price rises, the stop will automatically increase according to the set rate/value. If then the price decreases by at least the callback rate (after reaching the activation price, if any) and hits the stop level, the sell order will be triggered at market price.

🔸 For a Short position: set the trailing stop buy above the market price. As the price decreases, the stop automatically decreases. If the price rebounds according to the callback rate and hits the stop level, the buy order will trigger and close the position at market price.

⚠️ Note: For the trailing stop order to activate as a market order exit, both conditions must be met: activation price and callback rate.


Breakeven Price & Trailing Stop Orders: The perfect combination

These two tools support risk management but in different ways:


🔸 Breakeven Price: gives you an accurate reference point to know when a trade breaks even.
🔸 Trailing Stop Orders: automatically adjust according to favorable trends, helping to secure profits and limit risks.

💡 Tip: Many traders set the activation price of the trailing stop slightly above the breakeven price (for Long) or slightly below the breakeven price (for Short). This method ensures that the position does not incur a loss while still capturing additional profit if the trend continues.


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