What is a Close On Trigger order? – LeveX

The Close On Trigger function aims to ensure the execution of a closing order, independent of margin requirements. Its unique aspect lies in serving as an extra feature alongside Conditional Orders. This function automatically closes a position when a predefined trigger condition, typically the attainment of a specific price level, is met.

How does Close On Trigger work?

Selecting the Close On Trigger option for your Conditional Orders designates the order solely for closure in the system's handling, eliminating the need for margin upon triggering. This feature guarantees that only the existing position is closed, effectively averting any unintended opening of positions in the opposite direction.

When a Conditional Order with Close On Trigger is triggered:

The system performs an evaluation to ascertain whether the triggered Conditional Order will reduce the contract quantity of the current position. If the order quantity specified in the Close On Trigger order exceeds the size of the current position, the system will auto-adjust the order quantity of the Close On Trigger order or cancel it if there is no open position to be closed. This proactive approach ensures that no unintentional positions in the opposite direction are opened.

For Conditional Market Order, it will be executed and filled in the best available market price upon triggered even when there is insufficient margin.

For Conditional Limit Order, a Limit Order with Reduce-Only will be placed into the order book upon triggered and pending execution at the order price. Please note that there is no guaranteed execution for Limit Order and it may be executed immediately as a taker order if the order price is less favorable than the market price.

Note: LeveX's Take Profit/Stop Loss (TP/SL) function available in Perpetual and Futures Contract trading has a Close On Trigger mechanism embedded. It offers users the ability to manage position risks more effectively by enabling them to set TP/SL orders easily.

Example

Trader A holds a long position in a BTCUSDT contract using USDT margin. They have one contract opened at a price of $50,000. To secure their trade, they set a conditional market sell order B at $60,000 to take profit and a conditional market sell order C at $40,000 as a stop-loss measure. Both orders are set to trigger based on the Last Traded Price (LTP) and have a quantity of one contract. Now, we'll explore the implications of selecting or not selecting the Close On Trigger option for the Conditional Market Sell Order in this context.

Without Close On Trigger

With Close On Trigger

If Trader A's position reaches the trigger price of $60,000 for conditional market sell order B, the system will execute the sell order, closing the position at that price.
If the position subsequently experiences a price drop below $40,000, triggering conditional market sell order C, the system may execute a new short position instead of closing the existing long position. This could potentially lead to unintended exposure in the opposite direction.

Upon the trigger price of $60,000 being reached for conditional market sell order B, the system will execute the sell order, closing the existing long position at that price.
This ensures that Trader A's position is completely closed when the take profit condition is met, preventing any further exposure to market fluctuations.
Therefore, even if the price subsequently drops below $40,000 and triggers conditional market sell order C, there will be no open position to execute, safeguarding Trader A from unintended exposure in the opposite direction.

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