Wait for 15 seconds to access the link.
In trading, TP (Take Profit) and SL (Stop Loss) are some of the most important risk management tools. Let’s break them down below:
Take Profit (TP)
Definition: It is a pre-set price level at which a trade automatically closes to secure a profit.
Purpose: This is meant to help lock in gains once the market has reached a favorable level.
Example: If I buy EUR/USD at 1.1000 and place the TP at 1.1100, the trade will automatically close when the price hits 1.1100 when securing my profit.
Stop Loss (SL)
Definition: A predetermined price level set where a particular trade will automatically close in limiting losses.
Purpose: Safeguards traders from having to incur huge losses since the market moves against one’s position.
Example: If I buy EUR/USD at 1.1000 and set up an SL at 1.0900, the trade will close once the price hits 1.0900 and then limit my loss.
Key points
Automation: TP and SL have been set in advance, so they work even when the market cannot be monitored.
Risk Management: They keep disciplinary trading by limiting emotional-based decisions.
Customization: The levels for TP and SL depend on your trading strategy, risk tolerance, and market conditions.
Would you like to know how to calculate or set effective TP and SL levels?
