Stop Loss & Take Profit

Your way to safe trading!

When trading on an exchange, asset prices are constantly fluctuating. Sometimes they move in your favor, and sometimes against you. To protect yourself from significant losses and secure profits in advance, two useful tools exist: Stop Loss and Take Profit.

STOP LOSS

Stop Loss is a tool that helps limit potential losses by automatically closing a trade when the asset price reaches a predetermined level. It helps avoid major financial losses in case of unfavorable price movements.

Why is Stop Loss important?

• Capital Protection: Stop Loss limits losses if the market moves against the trader.

• Discipline: Setting a Stop Loss helps traders stick to their strategy and avoid emotional decisions.

• Automation: Stop Loss allows trading without constant market monitoring and closes the trade automatically.

How to set Stop Loss correctly?

• Don’t set it too close to the current price to avoid premature trade closures due to minor market fluctuations.

• At the same time, don’t place it too far, as this could expose you to significant losses.

Beware of slippage: In high volatility or low liquidity conditions, Stop Loss may not execute at the expected price. Always analyze market conditions before making decisions.

TAKE PROFIT

Take Profit is a tool that automatically closes a trade when the price reaches a pre-set profit level. It helps lock in earnings before the market moves in the opposite direction.

Why is Take Profit important?

• Automation: Take Profit automates trade closure, reducing the need for constant market monitoring.

• Emotional Stability: Setting Take Profit helps avoid impulsive decisions.

• Risk Management: Using Take Profit alongside Stop Loss helps control risks and protect capital.

Set realistic Take Profit levels – Don’t expect immediate price surges. Monitor market trends to determine a reasonable profit target.

Calculating Take Profit / Stop Loss Levels

To place Take Profit (TP) and Stop Loss (SL) orders in TonTrader, it is necessary to determine the specific price levels at which these orders should be triggered.

Experienced traders have the option to set the order price levels directly.

To simplify calculations, TonTrader includes a built-in Level Calculator designed to help compute the approximate target price levels for setting TP and SL orders, using the following information:

• The amount of the absolute profit/loss of the trade (how much the trader will earn/lose if the order is executed).

• The amount of the relative profit/loss (how much the trader will earn/lose as a percentage of the trade volume if the order is executed).

• The percentage price change (by what percentage the price must change for the order to be executed).

Regardless of the operating mode used by the Level Calculator, the orders are executed upon reaching the target TP or SL price set for the trade.

Modification and Cancellation of Take Profit / Stop Loss

Take Profit and Stop Loss can be set, modified, or cancelled even after the trade has been opened.

Conclusion

Combining Take Profit and Stop Loss is a key element of a successful trading strategy. This approach enhances discipline, confidence, and makes trading safer and more efficient.