What Is SL And TP on Profit Trade?

SL and TP are the two main tools used in trading for risk management and securing profit.

1. Stop Loss (SL)
   Definition: A pre-set price level where a trade automatically closes when the asset's price moves against the trade.
   Purpose: It helps limit the potential losses by exiting the trade when the price reaches a specified level.
   Example: If you go in for a currency pair at $1.2000 and insert an SL at $1.1900, by the time the price strikes $1.1900, your trade will get automatically closed; you'll not lose further money on that.
2. Take Profit (TP)
   A take profit is defined as a price level where one wants to lock the gained money by getting out of a position once the asset reaches such price.
   What does it do? This locks the profits because when the asset hits the specified price, one gets the opportunity to come out from the trade.
   Example: You go long a currency pair at $1.2000 and set a TP at $1.2100; the trade will close automatically when the price rises to $1.2100, capturing your profit at that level.
   Why SL and TP?
   SL and TP levels are very important to manage risk in trading appropriately:
   Protects the capital by limiting losses
   Protects profits by locking up gains at planned levels.
   It helps avoid emotional decisions and maintain discipline in trading.
   In short, SL and TP are both necessary components of a well-balanced trading strategy for the reason that they aid traders in managing their level of exposure to risk, as well as maintaining an approach that is systematic with regard to achieving consistent results.