Module 7: Perpetual Futures
Order Types, Execution, and Fees
Chapter 11 of 14 · about 6 minutes
11.1 The stop that didn't stop
Mint set a stop-loss on a BTC long at $97,000. During a sharp drop, the price fell through $97,000 in seconds. Mint's stop triggered, but the position was closed at $96,400, much worse than expected.
"I set the stop at $97,000," said Mint. "Why did I get $96,400?"
"Because a stop is a trigger, not a guarantee," said Hash. "What happens after the trigger depends on the order type and how much liquidity was there at that moment. In perps, execution details make a real difference to your results."
11.2 Basic order types, revisited
Module 1, Chapter 11 introduced market, limit, and stop orders. Perp exchanges add several variations.
| Order type | What it does | Main risk |
|---|---|---|
| Market | Fills immediately at the best available prices | Slippage in fast or thin markets |
| Limit | Fills only at your price or better | May not fill |
| Stop-market | When the trigger price is hit, sends a market order | Fills can be much worse than the trigger in fast moves |
| Stop-limit | When the trigger price is hit, sends a limit order | May not fill at all if price gaps past your limit |
| Take-profit | Closes a position when price reaches a target | Same execution choices as stops |
| Trailing stop | A stop that follows price by a set distance as it moves in your favour | Can be triggered by normal pullbacks |
11.3 Stop-market versus stop-limit
This is one of the most important choices in perp trading.
| Stop-market | Stop-limit | |
|---|---|---|
| After trigger | Market order | Limit order |
| Guaranteed to exit? | Almost always | No |
| Guaranteed price? | No | Yes, if it fills |
| Danger | Bad fill during a crash | Price gaps through the limit and the position stays open, possibly until liquidation |
Mint's stop was a stop-market order. It exited, but at a worse price. If it had been a stop-limit with a limit at $96,900, it might not have filled at all during the crash, leaving Mint's position open as price kept falling.
For protective stops on leveraged positions, many traders prefer stop-market orders: a worse fill is usually better than no exit. As Chapter 6 explained, also check whether the stop triggers on last price or mark price.
11.4 Perp-specific order options
Reduce-only. The order can only reduce or close an existing position, never open a new one or flip it in the other direction. This prevents a common accident: a take-profit or stop that fills after you've already closed manually, accidentally opening a new position. Use reduce-only on all exit orders.
Post-only. The order is only placed if it would add liquidity to the order book as a maker order. If it would fill immediately as a taker, it's cancelled instead. This guarantees maker fees.
Time in force. Settings that control how long an order stays active:
| Setting | Meaning |
|---|---|
| Good till cancelled (GTC) | Stays until filled or cancelled |
| Immediate or cancel (IOC) | Fills whatever it can immediately, cancels the rest |
| Fill or kill (FOK) | Fills completely immediately, or not at all |
Attached take-profit and stop-loss. Many exchanges let you attach a take-profit and stop-loss when opening a position, so your exits are set from the start.
11.5 Fees on notional
Perp trading fees are charged on notional value, not on margin. Like funding (Chapter 7), this means leverage multiplies fees relative to your capital.
| Value | |
|---|---|
| Margin | $1,000 |
| Leverage | 10x |
| Notional | $10,000 |
| Taker fee | 0.05% |
| Fee to open | $5 |
| Fee to close | $5 |
| Round-trip fees | $10 |
| As % of margin | 1% |
A 1% cost on margin per round trip might seem small. But a trader who opens and closes ten such positions a day pays 10% of their margin in fees daily, before any wins or losses.
| Factor | Effect on costs |
|---|---|
| Using limit orders as a maker | Lower fees, sometimes rebates |
| Higher trading volume tiers | Lower fees on many exchanges |
| Frequent trading | Costs multiply quickly |
| Higher leverage | Fees grow relative to margin |
11.6 Slippage and liquidity
Slippage is the difference between the expected price and the actual fill (Module 1, Chapter 11). In perps, it's driven by order book depth.
BTC and ETH perps usually have deep order books, so slippage on normal-sized orders is small in calm conditions. Smaller tokens can have thin books, where a market order of even a few thousand dollars moves the price significantly. During liquidation cascades (Chapter 8), order books thin out further, and slippage can be extreme for everyone, including the liquidation engine.
11.7 Total cost of a trade
Hash had Mint add up the real cost of a typical perp trade:
| Cost | Example (0.1 BTC, 10x, $1,000 margin, held 3 days) |
|---|---|
| Opening fee (taker, 0.05%) | $5 |
| Closing fee (taker, 0.05%) | $5 |
| Funding at 0.01% per 8 hours for 3 days | $9 |
| Slippage on exit (fill $10 per BTC worse than expected, on 0.1 BTC) | $1 |
| Total | ~$20, or 2% of margin |
"So I need BTC to move about 0.2% in my favour just to break even," said Mint.
"And that's in calm conditions with a small position," said Hash. "A strategy has to beat its costs before it makes anything."
11.8 Execution habits
- Attach a stop-loss when opening every position.
- Use reduce-only on all exit orders.
- Prefer stop-market orders for protective stops on leveraged positions.
- Know whether stops trigger on last or mark price.
- Use limit orders when you aren't in a hurry, to reduce fees.
- Avoid market orders in thin markets or during extreme volatility, unless exiting urgently.
- Include fees, funding, and slippage in every trade plan (Module 4, Chapter 16).
11.9 Try it yourself
On a demo or testnet perp exchange, open a small position with an attached take-profit and stop-loss. Check whether the exits are reduce-only and which price they trigger on. Then place a post-only limit order and observe what happens if you set the price so it would fill immediately.
Finally, find the exchange's fee schedule and calculate the round-trip fees on a $5,000 notional position as both maker and taker.
Key takeaways from this chapter
- A stop is a trigger, not a guaranteed price.
- Stop-market orders almost always exit but may fill badly; stop-limit orders control price but may not fill.
- Use reduce-only on exit orders to avoid accidentally opening new positions.
- Post-only orders guarantee maker fees by never filling as a taker.
- Fees are charged on notional value, so leverage multiplies their cost relative to margin.
- Slippage depends on order book depth and worsens sharply during cascades.
- Add up fees, funding, and slippage. Every trade must beat its costs.