What is a Take Profit / Stop Loss Order TP/SL Order

TP/SL stands for Take Profit / Stop Loss orders. These orders allow traders to automatically close their positions when the price reaches a certain level. As the name suggests, take profit orders lock in profits when the price moves in the trader’s favor, while stop loss orders immediately cut losses when the price moves against the trader, preventing further losses.

Both types of orders help manage your risk and reward in trading. For example, if you go long BTC with 1x leverage, entry at $30,000, and want to limit your profit and loss to a maximum of 20%, you can set a take profit order at $36,000 and a stop loss order at $24,000.

Suppose BTC hits $36,000, triggering the take profit order, and your position is automatically closed. Regardless of how BTC’s price moves afterward, you are guaranteed a +20% return on your principal.

Some exchanges also allow you to customize other parameters of TP/SL orders. For example, you can choose a market order or a limit order when the price reaches your target. For instance, a stop market order is called a stop market order, and a stop limit order is called a stop limit order. The difference is that a stop market order turns into a market order when triggered, meaning it will execute at any available price. Conversely, a stop limit order turns into a limit order when triggered, only executing below the preset trigger price.

You can also choose the percentage of your position you want to close at a certain price, which means you can set multiple TP/SL orders in the same direction. For example, in the previous BTC trade, you could set to close 50% of your position at $36,000 and the remaining at $40,000. **$MAGIC **$OSMO **$AMP **