Introducing TP/SL Price Protection: Safeguarding Traders from Market Volatility

Jan 31, 2024DerivativesInstitutions

Disclaimer: This is a general announcement. Products and services referred to here may not be available in your region. Please refer to T&C for more details.

We are thrilled to introduce TP/SL Price Protection, a tool crafted to safeguard traders from extreme market conditions and mitigate risks associated with trading Perpetual and Futures contracts on Bybit.

What is TP/SL Price Protection?

TP/SL Price Protection is a feature designed to shield traders from the adverse effects of extreme market volatility, reducing the risk of triggering Take Profit/Stop Loss (TP/SL) orders at unintended prices during turbulent market swings.

This feature offers traders the ability to set TP/SL using the Last Traded Price (LTP) as the reference point, ensuring a more precise execution strategy tailored to real-time market dynamics. Do note that the Price Protection settings are exclusive to TP/SL orders utilizing the LTP as the trigger reference, excluding orders based on the Mark Price or Index Price. Additionally, orders placed via API remain unaffected by the TP/SL Price Protection function.

Why Use TP/SL Price Protection?

Shield against extreme volatility: TP/SL Price Protection acts as a shield, preventing premature order execution during periods of heightened market volatility.
Control over order execution: traders gain greater control over order execution, allowing orders to be executed closer to the market price, minimizing the impact of short-term spikes or dips.

How Does TP/SL Price Protection Work?

TP/SL Price Protection operates by assessing the spread, which represents the difference between the Mark Price and LTP. This calculation is performed using the following formula:

Spread = abs(Last Traded Price - Mark Price) / Mark Price x 100% (rounded to 2 decimal places)

Once the Price Protection function is enabled, it intervenes to prevent TP/SL activation, even if the LTP reaches the trigger price. This intervention occurs if the spread exceeds the defined protection threshold. The protection remains in place until the spread returns within the protection threshold range.

To learn more about how to set your TP/SL Price Protection, please refer to our Help Center article here.