# System constraints - Stop Loss

Trades must have a stop loss capping loss at this % of system equity (C2 will create one if you don’t)

Can you give us more info on this? I set my constraint to 2%, so if my system capital is \$50k, then the constraint would be \$1k correct?

By C2 will create one if you don’t, can you explain this? I don’t want a market stop-loss orders on my system, I have a stop-loss constraint on my algorithm, so if it is ever reached, a market order would be triggered.

Thanks…

??

Really ??

> Can you give us more info on this? I set my constraint to 2%, so if my system capital is \$50k, then the constraint would be \$1k correct?

It’s a percentage of total system equity … not the starting cash of the system. So if your constraint is 2%, then C2 will set your stop loss such that the dollar amount of the stop loss will be 2% of the system equity (i.e. the Y value of your system equity chart).

> By C2 will create one if you don’t, can you explain this? I don’t want a market stop-loss orders on my system, I have a stop-loss constraint on my algorithm, so if it is ever reached, a market order would be triggered.

The statement “C2 will create one if you don’t” simply means that if you put an explicit stop loss in place which is “more strict” than the constraint value, C2 will not override your stop loss with an auto-generated less-strict one (i.e. “less strict” meaning one where the dollar loss would be higher).

It’s a percentage of total system equity … not the starting cash of the system. So if your constraint is 2%, then C2 will set your stop loss such that the dollar amount of the stop loss will be 2% of the system equity (i.e. the Y value of your system equity chart).

It makes sense.

The statement “C2 will create one if you don’t” simply means that if you put an explicit stop loss in place which is “more strict” than the constraint value, C2 will not override your stop loss with an auto-generated less-strict one (i.e. “less strict” meaning one where the dollar loss would be higher).

So I don’t have to have stop loss orders on my trades? you are simply saying that if I reach the threshold of x% of system equity then a stop loss order is created to make sure the threshold is not exceeded?

> you are simply saying that if I reach the threshold of x% of system equity then a stop loss order is created to make sure the threshold is not exceeded?

No, not exactly. I am saying C2 automatically creates a stop loss for all open positions automatically, as soon as a position is opened, such that the x% loss threshold you request is respected. But C2 will not do so if you already have in place a manual stop-loss order which is more strict.

I would really like to test this. So my next question is: Are the constraints active if I send signals to system while in "test mode" and I have constraints on my system set? I would be the only subscriber of course.

Yes. Auto-Constraints are active whether you are in test mode or not.