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Take Profit (TP)
Definition: A predetermined price level at which a trade will automatically close to lock in a profit.
Purpose: It assists the trader in locking in profits when the market reaches a favorable level.
Example: If you buy EUR/USD at 1.1000 and set a TP at 1.1100, the trade will automatically close once the price hits 1.1100, locking in your profit.
Stop Loss (SL)
Definition: A predetermined price level at which a trade will automatically close to limit losses.
Protect the trader from too big a loss if the market goes against the trader’s position.
For example, you have bought EUR/USD at 1.1000 and put a stop loss at 1.0900; in case the price moves to 1.0900, the trade will be automatically closed, which limits your loss