What a Stop-Loss Is
A stop-loss is an instruction to your exchange to automatically close a position if the price moves against you by a certain amount. It is your predefined exit for a losing trade.
Without a stop-loss, a losing trade can continue to lose indefinitely. A crypto asset that drops 15% can continue to drop another 30%, then another 50%. Stop-losses prevent this by defining in advance: "if price reaches X, I accept this loss and close."
Why stop-losses matter
The single most common reason traders lose their entire account is not a series of bad trades. It is one trade without a stop-loss that runs far beyond what was acceptable.
How It Works on a Spot Exchange
On a spot exchange, a stop-loss is typically implemented as a stop-limit or stop-market order. QARI uses stop-market orders because they guarantee execution over price exactness. A stop-limit can fail to fill if the price gaps past the limit.
- 1
Stop-loss set at entry
When QARI enters a trade, it immediately places the stop-loss order on your exchange. The stop is live from the moment the position opens.
- 2
Exchange monitors price
The exchange watches the market price continuously. Your stop order sits on the exchange server, not in QARI's software. This means the stop fires even if QARI's server is temporarily unreachable.
- 3
Trigger price reached
When the market price touches or falls below the stop-loss trigger price, the exchange activates the order.
- 4
Market sell executed
The exchange places an immediate market sell order for your full position size. The order fills at the best available price at that moment.
Why QARI Makes Stop-Loss Mandatory
Every QARI trade has a stop-loss from the moment it opens. This is not an option. It cannot be disabled.
Capital protection
QARI is managing someone else's capital. Mandatory stop-losses ensure that no single trade can wipe out a disproportionate share of a user's allocation.
Statistical discipline
An autonomous system must be consistent. If stop-losses are optional, the engine's risk parameters become undefined. Consistent stops are the foundation of consistent R-tracking.
Emotional neutrality
Without a stop-loss, a human watching a losing trade might hold on hoping for recovery. QARI has no emotion to override. The stop fires because the trade was wrong, not because of fear.
Defined risk by design
Unlimited downside risk is incompatible with responsible trading. Mandatory stop-losses define the maximum loss from the start, converting an open-ended liability into a known and accepted risk.
QARI's Stop-Loss Range (10% to 30%)
The stop-loss on every QARI trade falls between 10% and 30% below the entry price. This range is the platform minimum and maximum. QARI will never set a stop below 10% (too tight, normal volatility would fire it constantly) or above 30% (too wide, the potential loss is too large relative to position size).
Within this range, the exact stop level is determined by the technical structure of the setup. QARI places the stop below a key structural support level. If that level breaks, the trade thesis is invalidated regardless of how much the price has moved.
| Stop Depth | Example: $1,000 entry | Max loss on $200 trade |
|---|---|---|
| 10% | $900 | $20 |
| 15% | $850 | $30 |
| 20% | $800 | $40 |
| 25% | $750 | $50 |
| 30% | $700 | $60 |
What Happens When Stop-Loss Fires
When the stop-loss price is reached, the exchange sells your entire position at market. The sequence of events:
- 1
The exchange triggers the stop-market order.
- 2
Your position is sold at the best available market price (which may be slightly below the stop trigger due to slippage).
- 3
QARI receives confirmation of the sale from the exchange.
- 4
Your dashboard updates: position moves from Open to Closed with the final P&L.
- 5
A Telegram alert is sent: 'Stop-Loss Hit' with the exit price, realised loss, and R impact.
- 6
QARI records -1R on your daily and weekly R-tracker.
- 7
A cooldown period begins for that symbol.
The R-Ratio Connection
The stop-loss is the "R" in the risk-to-reward ratio. One R equals the distance from entry to stop-loss, expressed in USDT.
QARI requires a minimum 2.0R risk-to-reward ratio at entry. This means the profit target must be at least twice as far from entry as the stop-loss. A trade where you risk $50 must target at least $100 in gain to be acceptable.
Why 2.0R minimum matters
If QARI achieves a 50% win rate and every trade is exactly 2.0R, the maths works like this:
A 2.0R minimum means even a below-average win rate still produces positive returns. This is why QARI refuses to enter trades where the R/R is below 2.0, even if all other signals are perfect.