diff --git a/.env b/.env
index ca44597..7018327 100644
--- a/.env
+++ b/.env
@@ -61,7 +61,7 @@ PYTH_HERMES_URL=https://hermes.pyth.network
 # Position sizing
 # Base position size in USD (default: 50 for safe testing)
 # Example: 50 with 10x leverage = $500 notional position
-MAX_POSITION_SIZE_USD=80
+MAX_POSITION_SIZE_USD=78
 
 # Leverage multiplier (1-20, default: 10)
 # Higher leverage = bigger gains AND bigger losses
@@ -70,7 +70,7 @@ LEVERAGE=10
 # Risk parameters (as percentages)
 # Stop Loss: Close 100% of position when price drops this much
 # Example: -1.5% on 10x = -15% account loss
-STOP_LOSS_PERCENT=-1.5
+STOP_LOSS_PERCENT=-1.1
 
 # ================================
 # DUAL STOP SYSTEM (Advanced)
@@ -93,7 +93,7 @@ HARD_STOP_PERCENT=-2.5
 
 # Take Profit 1: Close 50% of position at this profit level
 # Example: +0.7% on 10x = +7% account gain
-TAKE_PROFIT_1_PERCENT=0.7
+TAKE_PROFIT_1_PERCENT=0.4
 
 # Take Profit 1 Size: What % of position to close at TP1
 # Example: 50 = close 50% of position
@@ -101,7 +101,7 @@ TAKE_PROFIT_1_SIZE_PERCENT=75
 
 # Take Profit 2: Close remaining 50% at this profit level
 # Example: +1.5% on 10x = +15% account gain
-TAKE_PROFIT_2_PERCENT=1.1
+TAKE_PROFIT_2_PERCENT=0.7
 
 # Take Profit 2 Size: What % of remaining position to close at TP2
 # Example: 100 = close all remaining position
diff --git a/lib/trading/position-manager.ts b/lib/trading/position-manager.ts
index 7e8441a..3403087 100644
--- a/lib/trading/position-manager.ts
+++ b/lib/trading/position-manager.ts
@@ -7,7 +7,7 @@
 import { getDriftService } from '../drift/client'
 import { closePosition } from '../drift/orders'
 import { getPythPriceMonitor, PriceUpdate } from '../pyth/price-monitor'
-import { getMergedConfig, TradingConfig } from '../../config/trading'
+import { getMergedConfig, TradingConfig, getMarketConfig } from '../../config/trading'
 import { updateTradeExit, updateTradeState, getOpenTrades } from '../database/trades'
 
 export interface ActiveTrade {
@@ -271,6 +271,85 @@ export class PositionManager {
     trade: ActiveTrade,
     currentPrice: number
   ): Promise<void> {
+    // CRITICAL: First check if on-chain position still exists
+    // (may have been closed by TP/SL orders without us knowing)
+    try {
+      const driftService = await getDriftService()
+      const marketConfig = getMarketConfig(trade.symbol)
+      const position = await driftService.getPosition(marketConfig.driftMarketIndex)
+      
+      if (position === null || position.size === 0) {
+        // Position closed externally (by on-chain TP/SL order)
+        console.log(`⚠️ Position ${trade.symbol} was closed externally (by on-chain order)`)
+        
+        // Determine exit reason based on price
+        let exitReason: 'TP1' | 'TP2' | 'SL' | 'SOFT_SL' | 'HARD_SL' = 'SL'
+        
+        if (trade.direction === 'long') {
+          if (currentPrice >= trade.tp2Price) {
+            exitReason = 'TP2'
+          } else if (currentPrice >= trade.tp1Price) {
+            exitReason = 'TP1'
+          } else if (currentPrice <= trade.stopLossPrice) {
+            exitReason = 'HARD_SL' // Assume hard stop if below SL
+          }
+        } else {
+          // Short
+          if (currentPrice <= trade.tp2Price) {
+            exitReason = 'TP2'
+          } else if (currentPrice <= trade.tp1Price) {
+            exitReason = 'TP1'
+          } else if (currentPrice >= trade.stopLossPrice) {
+            exitReason = 'HARD_SL' // Assume hard stop if above SL
+          }
+        }
+        
+        // Calculate final P&L
+        const profitPercent = this.calculateProfitPercent(
+          trade.entryPrice,
+          currentPrice,
+          trade.direction
+        )
+        const accountPnL = profitPercent * trade.leverage
+        const realizedPnL = (trade.currentSize * accountPnL) / 100
+        
+        // Update database
+        const holdTimeSeconds = Math.floor((Date.now() - trade.entryTime) / 1000)
+        try {
+          await updateTradeExit({
+            positionId: trade.positionId,
+            exitPrice: currentPrice,
+            exitReason,
+            realizedPnL,
+            exitOrderTx: 'ON_CHAIN_ORDER',
+            holdTimeSeconds,
+            maxDrawdown: 0,
+            maxGain: trade.peakPnL,
+          })
+          console.log(`💾 External closure recorded: ${exitReason} at $${currentPrice} | P&L: $${realizedPnL.toFixed(2)}`)
+        } catch (dbError) {
+          console.error('❌ Failed to save external closure:', dbError)
+        }
+        
+        // Remove from monitoring
+        await this.removeTrade(trade.id)
+        return
+      }
+      
+      // Position exists but size mismatch (partial close by TP1?)
+      if (position.size < trade.currentSize * 0.95) { // 5% tolerance
+        console.log(`⚠️ Position size mismatch: expected ${trade.currentSize}, got ${position.size}`)
+        // Update current size to match reality
+        trade.currentSize = position.size * (trade.positionSize / trade.currentSize) // Convert to USD
+        trade.tp1Hit = true
+        await this.saveTradeState(trade)
+      }
+      
+    } catch (error) {
+      // If we can't check position, continue with monitoring (don't want to false-positive)
+      console.error(`⚠️ Could not verify on-chain position for ${trade.symbol}:`, error)
+    }
+    
     // Update trade data
     trade.lastPrice = currentPrice
     trade.lastUpdateTime = Date.now()