Introduction to Close on Trigger Order
Specifically available as an additional option to conditional orders, the “Close On Trigger” function seeks to execute as a closing order that guarantees its execution regardless of margin requirements.
The main purpose for trading
By selecting the Close On Trigger option with your conditional orders, traders can guarantee the execution of their stop-loss orders even when there is insufficient margin. It can be done by allowing the system to automatically cancel other active orders to free up margin when there is insufficient available margin to execute your stop loss order. This option also ensures traders that their existing position will only reduce in contract size upon execution, preventing unintentional position increases in certain situations.
Trader A currently holds Buy Long 1,000 BTCUSD contracts at USD 5,000 and also sets a take profit limit order at USD 5200. In addition, Trader A also sets a conditional market order at USD 4,800 to stop loss/partial stop loss. The following are 2 examples of Trader A setting a stop loss with and without selecting the Close on Trigger order option:
- Without Close on Trigger
If the Last Traded Price moves to trigger the take profit at USD 5,200 first and then subsequently retrace to USD 4800, the previously placed conditional market order to stop loss will be executed (assuming sufficient margin). This will cause Trader A to hold a short position against his initial intentions.
On the other hand, if the Last Traded Price move in an unfavourable direction to USD 4,800, triggering the stop loss but due to insufficient margin to execute it, the stop loss order will be rejected by the system.
- With Close on Trigger
If the Last Traded Price moves to trigger the take profit at USD 5,200 first and subsequently retrace to USD 4,800, the corresponding stop loss order will be cancelled. This ensures Trader A will not hold a short position at USD 4800 which against his initial intentions.
On the other hand, if the Last Traded Price move in an unfavourable direction to USD 4,800, triggering the stop loss and the system detects that there is insufficient margin to execute it, active orders with the worst order price placed in the same direction as stop loss will be cancelled sequentially until there is enough margin to execute the stop loss.
Please take note:
1. By default, the Take Profit and Stop Loss function available on your existing position's tab has the Close on Trigger mechanism embedded, thereby having the highest execution priority over other orders.
2. Conditional order, with or without selecting the "Close On Trigger" option, can be submitted regardless of the margin requirements. However, when the trigger price of conditional order is triggered, the system will only then determine if there is sufficient available margin and verify the order requirements to execute the order successfully.
3. When conditional orders with "Close on Trigger" option is triggered:
|Conditional Limit Order||Conditional Market Order|
|1. Upon trigger, the system will prioritize order execution according to the order price||1. Has the highest execution priority equivalent to the stop-loss function located on current positions.|
|2. The system will determine if the newly triggered conditional limit order plus other active orders that placed at a better price will have a contract size larger than the existing position. If so, the system will automatically reduce/cancel the new limit order to ensure it is a closing order. Only after which will the system start checking the margin requirement to execute.||2. The system will determine if the triggered conditional market order will reduce the contract size of the current position. If not, the system will automatically reduce/cancel this conditional order to ensure it is a closing order. Only after which will the system start checking the margin requirement to execute.|
|3. When the available margin is insufficient, the system will automatically cancel other active orders placed in the same direction (cancellation priority will be given to orders with the worst order price) until sufficient margin is available.||3. When the available margin is insufficient, the system will automatically cancel other active orders placed in the same direction (cancellation priority will be given to orders with the worst order price) until sufficient margin is available.|
|4. Finally, according to Reduce-only mechanism, orders will be placed into the order book and pending for execution.||4. Finally, it will be executed at the best available prices in the order book.|