Stop loss is an automatic exit that closes a position once its loss reaches a threshold you set, such as a 10% loss, capping how far the position can fall before it is sold. It is the loss-side exit: it acts on one position at a time and looks only at how far that position is down.
Also seen as: loss limit, SL.
How does Fincanva handle it?
- Off by default; the threshold is entered as a negative percentage (e.g. −10%), and when enabled it starts at −30%.
- Adjustable across a range of −100% to −5%, shown as a percentage (suffix "%").
- It sits on the Position exits card, described there as "Auto-close rules applied to each position".
- Values outside the band are blocked with a "Stop loss must be between -100% and -5%." validation message.
- A position closed by this rule is recorded with the exit reason Stop loss.
How does stop loss decide when to close?
Stop loss closes a position once its loss reaches the threshold you set. The threshold is entered as a negative percentage (e.g. −10%) because it describes a loss, so a value closer to −100% keeps a position open longer, while one closer to −5% closes it sooner. It looks neither at how long the position has been held, which is max hold, nor at a gain: where take profit caps the upside, stop loss caps the downside. The loss is counted from the price the position was first opened at and keeps counting through every rebalance that keeps the position, exactly as for take profit.
The check is not tied to the rebalance schedule: the loss is read on the position's own price bars, so a stop loss can close a position between two rebalances. It closes on the first bar that reaches the threshold — at the threshold level itself, or at that bar's open when the bar opens already past it, which is how a stop-out can book a loss larger than the threshold after a gap. Execution time has the full fill rule.
What if one bar reaches both the stop-loss and the take-profit level?
Only one of them closes the position, and the bar decides which. If the bar opens already past one of the two levels, that one wins. Otherwise a daily bar does not say which extreme came first, so Fincanva follows one fixed convention: a bar that closed at or above its open is taken to have reached its low first, and a bar that closed below its open its high first. For a long position that means a stop-out on a rising bar and a take profit on a falling one; for a short position it is the other way round.
Can a stopped-out instrument be bought again?
Yes, but never on the bar that closed it. New positions are opened when the strategy rebalances, and at no other time, so the earliest the same instrument can come back is a later rebalance at which the strategy's rules select it again. If you set a reinvest delay, the instrument stays out of the strategy's choices until that delay has passed, counted from the day of the stop-out. Until that rebalance the capital the stop-out freed stays in cash; what happens at the rebalance itself — and the two alerts that say so — is in position exits.
What does it look like in practice?
A position is opened at a price of 100 with stop loss set to close at a 10% loss. When the price falls to 90, the position's return is −10%, which reaches the threshold, so the position is sold and the loss is capped at that point. Had stop loss instead been set to a 20% loss, the same position at −10% would remain open and could fall further before the rule closed it.
Fincanva does not recommend a stop-loss level, or whether to use one at all.
Used in 16 pages
- The Fincanva loop · Getting started
- Position exits · Strategies
- Set up a risk condition · Strategies
- When risk management changes a strategy · Strategies
- All at once
- Auto-rebalance on flip
- Data-quality bias
- Execution time
- Exit reason
- Max hold months
- Positions detail drill-down
- Rebalance
- Reinvest delay
- Step by step
- Strategy alerts
- Take profit