How to Close a Position: Full, Partial, and After

Quick Answer

The first thing to know about how to close a position is placing an order in the opposite direction. Positions are closed on a long by a sale, on a short by a purchase of the same size; meanwhile, spot positions are also sold.

Major Takeaways

• A close is an offsetting order of equal size, and the position remains open until it is filled.

• A market close emphasizes getting out, a limit close emphasizes price, and neither of these offers both.

• “Close all” is not a one-size-fits-all option; find out what it covers first before using it.

What Closing a Position Actually Does

A close position order is a trade in the opposite direction. The CFTC defines it as an equal and opposite transaction, or offset. Traders sell to close a long; buy to close a short. In spot, there are no positions; you simply sell what you hold.

Nothing closes until the order fills. Canceling an order that hasn’t executed is a different action from closing a position, and closing doesn’t by itself repay borrowed funds on a margin product. The profit/loss on the filled portion is settled at the fill, and the rest continues to move.

However, on some platforms, an account can hold a long and a short in the same market at the same time. In that setup, an order in the opposite direction may open a second position instead of closing the first.

Remember to review the mode of your account, and each build's instructions themselves, as menus and labels vary between web and app versions.

Closing a Single Position

When you close a position, you make a selection about how to get out of it. In stock trades, a market order priority is getting out, but it doesn't necessarily mean the same price as the last price in a fast market, according to the SEC. 

It is roughly the same with cryptocurrency exchanges. A limit order determines the price, but it will only fill when it is reached.

Closing orders that automatically execute on their own are called either stops or take-profits. A triggered stop turns into a market order in stock markets, which means that the fill may occur outside of the stop price, and some exchanges include stop-limit variations. 

A guide on take-profit and stop-loss allows for better preparation. 

Once you've submitted, review the status of your order and its remaining capacity before placing a new order. If you assume it fails and send a second order, you can end up having a duplicate trade.

Closing Part of a Position

A partial close is a smaller offsetting order. Suppose the trader has a linear contract, such as the trade above, which is holding four units at a price of $60 each. If you sell one at $65, then one-quarter of the position will close and – before costs (and assuming, for simplicity's sake, that one contract = one unit) – trading the $65 unit would generate a gross profit of $5.

Few differences exist between platforms: the way in which the entry price of a position is displayed, the size of the margin released, and whether the size of stop and take profit reduces, stays the same, or is deactivated.

Closing Everything at Once

Close all positions is a bulk action, but there is no universal action definition. It could cover all of one product or an entire account, depending on the platform.

Before doing this, determine if it executes market orders, which can cause screen prices to vary from fills, and/or thin markets to introduce slippage. Also look to see if it closes out open orders like stops and take-profits. Trades executed cannot just be canceled, nor does closing trades repay borrowed funds with margin products.

If positions share the same margin, closing them all will also alter what supports them in the background.

Why a Close Might Be Rejected

The first step is to analyze and fix what might have gone wrong. 

Rejected means the platform didn’t accept the order. Unfilled means it was accepted but hasn’t executed, as with a limit price the market hasn’t reached. Partially filled means only part of it has executed, and the remainder may still be open.

Other reasons which vary by platform may warrant you checking whether the size is too small or too large (for the position); if there are open orders in the same size; or if there is a mismatch between the position mode and reduce only.

Risk disclosures for regulated futures also warn that trading halts, system failures, and illiquid markets can make it difficult or impossible to exit a trade.

Read the exact error and then compare instrument, side, amount, remaining quantity, and order status. If it remains unclear, confirm the platform rules via documentation or support.

If You Never Close: Funding, Margin, and Liquidation

It depends on the instrument what happens. In spot, assets are held, and price exposure remains. Spot, an ordinary account, does not have any funding or loan interest; however, other account or network charges may apply.

Funding payments are paid between the longs and the shorts, but the perpetual never expires and can remain open indefinitely.

Eight hours is standard but not mandatory; it is the funding rate's sign that determines which side pays. 

A future trade with a date runs until it comes to an end and is settled according to its own terms pending the date, in cash or by delivery, as agreed. With a margin loan, interest is typically charged on the amount borrowed, as long as it is outstanding.

This guide outlines the automatic liquidation of leveraged positions.

Conclusion

Closing a position simply involves offsetting orders of the same size. What determines the decision includes order type, closing percentage, and remaining assets; the answers are instrument- and platform-dependent.

Whatever you hold, the exit fills at what the market offers at that moment.

Open an XXKK account to close positions from one screen.

Set a take-profit or stop on XXKK so the exit does not depend on you watching.

Close part of a winner rather than moving the stop and hoping.

FAQs

How do I close a position?

You sell to close a long, buy to close a short. Order in the opposite direction of the same size. All spot holdings are sold.

What is the difference between close and close all?

Close tends to operate on one specific location, whereas close all is a bulk action. These actions aren't universal but depend on what they cover on a specific platform.

Can I close part of a position?

It can be done. A smaller offsetting order leaves part unclosed and part open. 

What happens if I never close a position?

It all depends on the instrument. Spot remains fixed, perpetuals build up funding, dated futures expire, margin loans have interest charges, and leveraged positions can be liquidated.