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  • Writer's pictureGlobal MoonXBT

Detailed explanation about Take Profit and Stop Loss

You are allowed to set and adjust Take Profit and Stop Loss when opening or holding a position. With TP and SL function open, you can better control trading risks and profit as well as loss in advance. Then you don't need to keep an eye on market trend all the time. The position will be closed at the market price when it reaches the Trigger Price set by you beforehand.

Take Profit from Buy/Long Position:

In Buy/Long position, when BID Price increases to Trigger Price(TP Price), position will be closed automatically at market price.

Example:

Trader A opens a position with $100 and expects it to increase to $150 and then decrease. Therefore Trader A sets $150 as the TP price. When BID Price reaches $150, position will be closed automatically at market price to control profit.





Stop Loss on Buy/Long Position:

In Buy/Long position, when price decreases to Trigger Price(SL Price), position will be closed automatically at market price.

Example:

Trader A opens a position with $100 and expects it to increase. Unfortunately, the market price goes down. Trader A can sustain a maximum loss of $50. Therefore he sets $50 as the SL price. When BID Price reaches $50, position will be closed automatically at market price to control loss.




Note:

When setting TP and SL price in opening Buy/Long Positions, please make sure the Trigger Price must be more than 5% of current price. If the gap is too narrow, your positions may be closed immediately.

When BID price reaches TP or SL Price, positions will be closed immediately at market price. When the market is not volatile, Settlement Price may equal Trigger Price. But the final Settlement Price is determined by market volatility, trade volume and other factors. It's quite common to encounter slippage, which results from trading operation mechanism.

Click HERE to learn more about Slippage.

Click HERE to learn more about Trading Operation Mechanism.

Take Profit from Sell/Short Position:

In Sell/Short Position, when ASK Price decreases to Trigger Price(TP Price), position will be closed automatically at market price.

Example:

Trader A opens a position with $150 and expects it to decrease to $100. Therefore Trader A set $100 as the TP price. When ASK Price reaches $100, position will be closed automatically at market price.






Stop Loss on Sell/Short Position:

In Sell/Short Position, when ASK Price increases to Trigger Price(SL Price), position will be closed automatically at market price.

Example:

Trader A opens a position with $100 and expects it to decrease. Unfortunately, the market price goes up. Trader A can sustain a maximum loss of $150. Therefor he sets $150 as the SL price. When ASK Price reaches $150, position will be closed automatically at market price.



Note:

When setting TP and SL price in opening Sell/Short Positions, please make sure the Trigger Price must be more than 5% of current price. If the gap is too narrow, your positions may be closed immediately.

When ASK price reaches TP or SL Price, positions will be closed immediately at market price. When the market is not volatile, Settlement Price may equal Trigger Price. But the final Settlement Price is determined by market volatility, trade volume and other factors. It's quite common to encounter slippage, which results from trading operation mechanism.

Click HERE to learn more about Slippage.

Click HERE to learn more about Trading Operation Mechanism.

Take advantage of TP and SL function to lock profit in advance:

When the trader has already made profit, set SL Price as his/her preferred profit price can lock profit in advance.

Example:

Trader A chooses to open Buy/Long Position with $100. When the price increases to $200, the order is profitable already. But Trader A predicts that the price may go down. Therefore Trader A sets SL Price at $180. When market price goes from $200 to $180, the position will be closed automatically at market(ASK/BID) price.

That is to say, Trader A locks the profit (Price goes from $100 to $180) when setting SL price.

If market price doesn't go down and keeps rising, SL function won't be triggered. Trader A may make more profit.

So is Sell/Short Position. Traders can use Stop Loss function to lock profit in advance when the market is going down.


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