Guide

The global stop loss: what it is for and how to set it

When you copy a strategy, you do not choose the positions one by one. There is still one setting that depends on you alone: the maximum loss you accept on the copy as a whole. That is the global stop loss. This guide explains what it really does, what it does not do, and how to choose its level.

What it is

A stop loss is an order that closes a position when its loss reaches a set level. The global stop loss applies to your whole copy at once: if the copy account loses the chosen percentage, all copied positions are closed and the copy stops.

Example: your copy is worth €2,000, with a 50% global stop loss. If it falls to €1,000, everything is closed and you get back about €1,000. To resume, you have to restart the copy yourself.

At Vantage, this setting is simply called “Stop Loss”, in the copy's risk management section. The percentage applies to the value of the copy account, and the app shows the estimated loss in euros next to it.

What it protects, and what it does not

It protects against a loss greater than the limit you have set, for example if the strategy keeps losing without ever recovering.

It does not protect against:

The amount lost below the limit. A 50% stop loss means you accept losing half. It is not a capital guarantee.
Price gaps. In a very sharp move or when the market reopens, positions may be closed slightly beyond the planned level.
A loss realised at the wrong moment. This is the most important point, and it deserves its own section.

The trap: turning a temporary fall into a permanent loss

Some strategies go through large temporary falls before recovering (see our guide on floating drawdown). If your global stop loss is tighter than these falls, it triggers at the bottom, closes everything and stops the copy: the loss becomes permanent, and you do not benefit from the recovery that follows.

Example: a strategy whose worst known floating drawdown is about 75%. With a 50% global stop loss, this drawdown would have cut the copy with a loss of about half the amount, even though the positions were eventually closed in profit.

A global stop loss that is too tight therefore does not make the copy safer: on the contrary, it can lock in the very loss it was meant to avoid.

How to choose its level

Look at the strategy's worst published floating drawdown. A global stop loss tighter than this figure risks triggering during a phase the strategy has already been through.
Remember that the past does not set limits on the future. The worst known drawdown can be exceeded. That is precisely what the global stop loss is for.
Manage your risk through the amount, not through the stop loss. If the idea of losing 95% of the sum is unbearable to you, the right answer is to invest less, not to tighten the stop loss. Choose a sum whose almost total loss would not change your life.
Do not set a stop loss or a take profit on individual positions. On a strategy that closes its positions in baskets, an order placed on a single position closes it outside that logic and can turn a winning basket into a loss.
Check what the percentage applies to. Depending on the platform, it can apply to the starting amount or to the account value. At Vantage, it applies to the value of the copy account.
Check the default setting. Platforms often suggest a default level. At Vantage, it is 50%: you have to change it yourself if you want another value.

And at PlanetFinance?

To copy PlanetFinance, our setup guide specifies a 95% global stop loss, instead of the 50% suggested by default, and no take profit. This level is a last safety net, not protection: it only triggers once the copy account has lost 95% of its value. Day to day, the stop losses are part of the strategy, which is adapted to market conditions. The worst estimated floating drawdown, about 75%, is detailed on the Risks page.