The crucial take-profit (TP) and stop-loss (SL) in trading allow better control over risks and ensure locked profit; here’s a simplified description of both terms.
Take Profit: TP
A predetermined level where the price of the trade is closed, securing some amount as a profit, while this usually closes a market because that price was quite favorable and may go high again from that position.
Example: When you purchase EUR/USD at 1.1000 and set a take profit at 1.1100, the trade will automatically close once the price reaches 1.1100, and your profit is locked.
Stop Loss (SL)
A pre-set price level where a trade will automatically close to limit losses.
It protects the trader from extreme losses if the market moves against their position.
Example: If you buy EUR/USD at 1.1000 and place a stop at 1.0900, the trade will automatically be closed if the price falls to 1.0900, capping your potential loss.
