TP (Take Profit) and SL (Stop Loss) are risk management tools used to lock in profits in trading. Here’s what they mean:
Take Profit (TP)
Definition: A predetermined price level at which a trade automatically closes to secure a profit.
Purpose: It helps traders lock in gains 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, 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 an SL at 1.0900, the trade will close automatically if the price drops to 1.0900, limiting your loss.
