Take Profit & Stop Loss
Take Profit / Stop Loss Orders
Take Profit (TP) orders are used to automatically close a position and secure profits once the market price reaches a predefined level:
- For Long positions, the TP should be set above the entry price.
- For Short positions, the TP should be set below the entry price.
Stop Loss (SL) orders are used to automatically close a position and limit losses once the market price hits a predetermined level:
- For Long positions, the SL should be set below the entry price and above the liquidation price.
- Below the entry price: to cut losses early.
- Above the liquidation price: to reduce the risk of forced liquidation.
- For Short positions, the SL should be set above the entry price and below the liquidation price.
- Above the entry price: to cut losses early.
- Below the liquidation price: to reduce the risk of forced liquidation.
How to set TP/SL effectively?
- Long positions
- TP: place it at a level higher than the entry price to secure profit.
- SL: place it lower than the entry price to limit losses, but make sure it is still above the liquidation price to avoid being liquidated.
- Short positions
- TP: place it at a level lower than the entry price to secure profit.
- SL: place it higher than the entry price to limit losses, but ensure it is still lower than the liquidation price to avoid liquidation.