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Take Profit (TP)
Definition: A pre-set price level where a trade will automatically close to ensure that a profit is obtained.
Purpose: Helps lock gains when the market moves into a favorable level.
Example: If you buy EUR/USD at 1.1000 and set a TP at 1.1100, the trade will automatically close when the price hits 1.1100 and will secure your profit.
Stop Loss (SL)
Definition: A pre-set price level where a trade will automatically close to limit losses.
Purpose: It protects the trader from excessive losses if the market moves against his position.
Example: If you buy EUR/USD at 1.1000 and set an SL at 1.0900, the trade will close automatically if the price drops to 1.0900, limiting your loss.