What do stop-loss and take-profit orders actually do?
Both are triggers, not guarantees. Each watches a price and, when it is reached, sends an order to the market on your behalf. Whether that order fills, and at what price, depends on conditions at that moment. Margin is separate: it is the collateral that decides how far the market can move before the decision stops being yours. The liquidation-distance table below shows how far that actually is.
Key Takeaways
- A stop order is a trigger that creates a second order. Whether it becomes a market order or a limit order determines whether you get filled at all.
- Liquidation does not wait for your margin to run out. On Hyperliquid the maintenance margin is half the initial margin at an asset's maximum leverage, ranging from 1.25% on 40x markets to 16.7% on 3x markets.
- That means identical leverage survives different distances in different markets. A 10x position sits roughly 8.75% from liquidation in a 40x market and about 5% away in a 10x market.
- Being liquidated costs more than closing yourself. In a backstop liquidation the maintenance margin is not returned to the user, which is the concrete reason to exit before the mark price arrives.
- On the Entry.fi Terminal, take-profit and stop-loss are built into the order ticket, and leverage and margin mode are set together in one dialog.
In This Article
- What each control actually does
- Stop-market or stop-limit: the difference that decides whether you fill
- How margin actually works
- How close your liquidation really is
- What a stop-loss cannot protect you from
- Risk controls on the Entry.fi Terminal
- FAQ
What each control actually does
The three tools are usually presented together as though they were the same kind of thing. They are not, and the differences are where the losses live.
A stop-loss is a resting instruction that does nothing until a trigger price is reached. At that moment it submits an order to close the position. It has no power over the market and no claim on any particular price. It converts a decision you made calmly into an order sent at the worst moment you chose in advance.
A take-profit is the identical mechanism pointed the other way. Same trigger, same submission, same lack of guarantee, aimed at the level where you intended to stop being exposed rather than the one where you intended to stop losing.
Margin is not an order at all. It is collateral, and it defines the boundary past which the position stops being yours to manage. Stops and take-profits are choices. Liquidation is what happens when you run out of room to make them.
Stop-market or stop-limit: the difference that decides whether you fill
This is the single most consequential detail in the whole subject, and it is routinely skipped.
When a stop triggers, it submits one of two things. A stop-market order closes the position at whatever price is available. It will fill. What it will not do is tell you the price in advance, and in a fast market the gap between your trigger and your fill can be substantial.
A stop-limit order submits a limit order at a price you set. It protects you from a terrible fill, and in exchange it accepts the possibility of no fill at all. If price moves through your limit faster than the book can match you, the order sits there unfilled while the position keeps losing. The protection you configured is the reason you still hold it.
Neither is the correct answer in general. The trade is certainty of execution against certainty of price, and you cannot have both. What matters is knowing which one you selected, because a stop-limit set and forgotten behaves like no stop at all on precisely the day it was supposed to matter.
How margin actually works
Two numbers govern a leveraged position, and most traders only know the first.
Initial margin is what opening costs. The margin required to open is position size times mark price divided by leverage, so 10x means committing a tenth of the notional.
Maintenance margin is the floor beneath it, and it is the number that ends positions. It is set at half the initial margin at the asset's maximum leverage, which produces a range from 1.25% on assets capped at 40x up to 16.7% on assets capped at 3x. Note what that depends on: the market's maximum leverage, not the leverage you selected.
Margin mode changes the picture again. Cross margin shares collateral across all cross positions, while isolated margin confines an asset's collateral to that asset, so liquidations in one do not affect the others. Cross is more capital-efficient and lets a winning position cushion a losing one. It also lets one losing position consume the buffer protecting everything else.
One detail worth internalizing: leverage is only checked when a position is opened, and afterwards the user is responsible for monitoring it. Nothing re-checks on your behalf.
How close your liquidation really is
Here is the arithmetic almost nobody works through, and the result is counterintuitive enough to be worth the two minutes.
For a long position, the liquidation trigger sits near entry price × (1 − 1/leverage + maintenance margin fraction). Because the maintenance fraction is set by the market's cap rather than your selection, the same leverage buys you different amounts of room depending on which market you are in.
Approximate adverse move from entry to the liquidation trigger, before fees and funding, for an isolated long. Maintenance margin derived from the rule that it equals half the initial margin at the market's maximum leverage.
Read across the 10x row. The same leverage setting leaves 8.75% of room in a market capped at 40x and 5% in one capped at 10x. Markets get low leverage caps because they are volatile, so the market most likely to move 5% against you is also the one that liquidates after 5%. The two effects compound rather than cancel.
Two caveats keep this honest. For cross-margin positions the liquidation level moves with the unrealized profit and loss of everything else you hold, so it is not fixed at entry the way an isolated position's is. And the figure any interface displays is an estimate that shifts with funding payments and book conditions.
What a stop-loss cannot protect you from
A stop is a good tool with four specific blind spots, and each has ended positions that were "protected."
Gaps. A stop cannot fill at a price the market never traded at. When a market reopens after a closure, or reprices violently on news, the first available price can be well beyond your trigger. This matters more than usual for markets whose underlying benchmark venue closes overnight and at weekends while the perpetual keeps trading.
The price your stop watches may not be the price that liquidates you. Liquidations use the mark price, which combines external exchange prices with the venue's own book state, deliberately so that a single thin-book wick cannot trigger an unfair cascade. A stop referencing a different price can therefore sit untouched while the position is closed for you.
The cost of being late. In a backstop liquidation the maintenance margin is not returned to the user, because the liquidator vault needs a buffer to stay profitable on average. Hyperliquid's documentation says plainly that placing stop-loss orders or exiting before the mark price reaches the liquidation price is how a trader avoids losing that margin. Closing yourself and being closed are not the same financial event.
Auto-deleveraging. When ordinary liquidation leaves a shortfall, profitable counterparties can have positions closed against the underwater trader. A stop-loss on a winning position offers no defense against this, because the problem is not your position at all.
Risk controls on the Entry.fi Terminal
Take-profit and stop-loss are part of the order ticket rather than separate orders placed afterwards, each with its own inputs and a row of percentage presets, so both exits can be defined before the position exists. A Reduce Only option sits alongside, and the order type selector offers Market, Limit, Scale and TWAP.
Leverage and margin mode are set together in a separate dialog, which states the choice plainly: Cross means all open positions share the same margin and exposes the full account balance, while Isolated limits risk to the margin assigned to that specific position, leaving other positions unaffected. A slider sets leverage within the market's cap.
The ticket reserves space for liquidation price, order value and fees, and the positions bar carries liquidation risk, maintenance margin and unrealized profit and loss alongside each position's liquidation price. The market header shows mark price and oracle price as separate figures, which is the distinction that matters most for everything above, since liquidation is measured against the mark price rather than the one a stop might be watching.
Entry.fi is the interface. It does not act as an exchange, a broker, a counterparty, or a custodian, and orders route to independent onchain venues rather than to any order book Entry.fi operates. Perpetual markets track the price or valuation of the underlying asset and do not confer ownership of it.
FAQ
Does a stop-loss guarantee I exit at that price?
No. It guarantees an order is submitted when the trigger is reached. A stop-market order will fill at whatever is available, which may be worse than the trigger. A stop-limit order may not fill at all if price moves through your limit.
Why did I get liquidated before my margin ran out?
Because liquidation triggers at the maintenance margin, not at zero. That floor is half the initial margin at the market's maximum leverage, so on a 20x market it sits at 2.5% of notional and the position closes while that much collateral remains.
Why does the same leverage feel riskier on some markets?
Because the maintenance margin follows the market's leverage cap rather than your setting. A 10x position has roughly 8.75% of room in a 40x market and about 5% in a 10x market, and the lower-cap market is usually the more volatile one.
Should I use cross or isolated margin?
They answer different questions. Cross shares collateral across positions and is more capital-efficient, but one loser can drain the buffer protecting the rest. Isolated confines both the collateral and the liquidation to a single position, and fixes its liquidation level at opening.
Can my position be closed even if I am in profit?
Yes, through auto-deleveraging. When liquidation leaves bad debt, profitable counterparties can be closed out to keep the system solvent. It is a last resort rather than routine, but no stop-loss prevents it.
Is it cheaper to close myself than to be liquidated?
Yes, in a backstop liquidation, where the maintenance margin is not returned. Exiting before the mark price reaches the liquidation level preserves collateral that a forced close would not.
A stop-loss is a decision made in advance. Liquidation is what happens when there are no decisions left.
Open the Entry.fi Terminal and check the leverage cap on the market you are watching.