The previous article described the exchange as a queue of offers. This one is about what you actually do to that queue. Every trade, whatever the strategy behind it, is the same four things in sequence: an order (an instruction), a position (an exposure while the trade is open), an exit (a second instruction that ends it), and a result (one number, after costs). Every backtest on this site is a list of exactly those four things, repeated — with one caveat: the simulator’s default leverage is 5 (check it in the simulator), and above 1x a trade gains a fifth way to end, liquidation — and liquidation is checked before the stop-loss. The next article covers that path.
An order is an instruction; a fill is what happened
An order is not a trade. It is a request to the order book, and the book decides what happens. The two basic kinds differ in what you fix and what you leave open:
- A limit order fixes the price. Binance’s futures documentation defines it as an order that “allows you to place an order at a specific or a better price” (Binance — Types of Order on Binance Futures). You name your number and wait; if the book never reaches it, nothing happens.
- A market order fixes the timing. The same page: “A Market Order is matched immediately at the best available price.” You get filled now, at whatever the other side of the book is offering — which may be a worse number than the one on your screen a moment ago. The page names that gap directly: “slippage could occur where you get an executed price different from what you expected.”
The word for the part that actually happened is a fill. A limit order can sit unfilled forever; a market order is filled at once but at a price you did not choose. Neither is the “right” order — they trade certainty of price against certainty of execution, and the previous article already showed the cost side of that choice: a resting limit order is usually the maker, a market order is always the taker.
A position is the thing you are exposed to
Once an order fills, you have a position: an amount of something whose price now moves your account. Positions have a direction.
- Long means you bought, and you gain if the price rises.
- Short means you sold first, and you gain if the price falls. On spot you cannot sell what you do not have, so a spot short means borrowing the coin first; on a perpetual contract, a short is simply the other side of the same contract — which is why the perpetual data on this site can carry short trades at all.
Direction is not a metaphor here. It is the sign of the arithmetic: for a long, the profit is exit price minus entry price; for a short, it is entry price minus exit price, divided by entry either way. That is literally how this site’s engine computes every trade — the simulation code branches once on direction and applies one of those two lines, nothing more (the methodology page describes the rest of the engine) — and the risk article later in this track builds its position-sizing rules on the same arithmetic.
An exit is a second order — and you can write it in advance
A position ends the same way it began: with an order that fills. What is different is that you can leave the closing instruction on the exchange before the price gets there. Two kinds matter:
- A stop order waits for a trigger price and then acts. Binance defines the stop-limit variant as “a conditional order over a set timeframe, executed at a specified price after a given stop price has been reached,” and the stop-market variant as one that “uses a stop price to trigger the trade. However, when the stop price is reached, it’ll trigger a Market order” (same source as above).
- A stop-loss and a take-profit are not new order types. They are the same stop and limit orders, placed at the price where you have decided in advance to give up, or to take what you came for.
One consequence is easy to miss. The trigger price of a stop-market order is not a fill price — it is the moment a market order gets sent. In a fast move, the fill lands wherever the book is by then. A stop-loss at a number is a plan, not a guarantee.
The result is one number, after costs
Close the position and the trade collapses to a single figure. Before costs it is the direction arithmetic above: buy at 100, sell at 110, and the trade made 10% of what you put in; sell short at 100, buy back at 90, and it made the same 10%.
After costs it is less, and there are two costs on every trade, not one — because a trade is two fills. Each fill pays a fee, and each fill can slip. A strategy that looks profitable per trade before costs and unprofitable after them is not bad luck; it is arithmetic — a small edge per trade minus two fills of cost can be negative — and the fees article in this track puts numbers on it.
What a trade is, on this site
The simulator on this site does not send orders to any exchange. It replays candles and applies one fixed definition of a trade, so it is worth stating that definition plainly, because every result here is a claim about this trade and no other:
- A signal is evaluated only on a completed candle. The entry is a market order assumed to fill at the next candle’s open, with a slippage allowance applied against you.
- The stop-loss and take-profit are checked against each following candle’s high and low, and are assumed to fill at the planned price, less the same slippage allowance on the way out. If both would trigger inside the same candle, the engine records the loss, not the gain.
- If neither triggers, the trade exits at a candle’s close when the strategy’s rules say so, or when it times out.
- A fee is charged on each side, entry and exit. On perpetual data, funding is also settled for every funding interval the position stays open — the next article explains what that is.
Two of those lines are optimistic on purpose and you should know which. A real stop-market order does not guarantee a fill at the stop price — the section above explains why — and a real market order can slip by more than a fixed allowance, on the way in and on the way out alike. So a backtest here assumes planned-price exits and a fixed slippage allowance; live fills and costs can differ, especially during fast moves, and it is not a record of what an account would have done. The backtesting article later in this track is about how far that gap can open.
What turns a single trade into a losing account faster than anything above is doing it with borrowed money. That — leverage, margin, and liquidation — is the next article.
What you should be able to say now
- An order is an instruction; a fill is what the book actually did with it. Limit fixes price, market fixes timing.
- A position is an exposure with a direction, and direction is the sign of the arithmetic: long profits from a rise, short from a fall.
- A stop-loss is a stop order placed in advance. Its trigger price is not its fill price.
- A trade is two fills, so it pays two fees and can slip twice.
- On this site a trade means: next-open entry, high/low stop and target checks filled at the planned price less a fixed slippage allowance, loss recorded when both hit — and that definition is more forgiving than a live account.