In trading, TP, and SL are important tools applied for managing risk and taking home profits. Let me try to break down exactly what they mean.
Take Profit (TP)
A definition is a preset price level where a trade automatically closes to lock up some profit.
This means that it helps traders lock the gain when the market arrives at a favorable level.
Example: If you buy EUR/USD at 1.1000 and set a TP at 1.1100, the trade will close automatically once the price hits 1.1100, securing your profit.
Stop Loss (SL)
Definition: A pre-set price level where a trade automatically closes to limit losses.
Purpose: Protects traders from excessive losses if the market moves against their position.
Example: If you buy EUR/USD at 1.1000 and set SL at 1.0900, the trade will automatically close if the price drops to 1.0900, limiting your loss.
