How does a Stop Loss/Take Profit work?

Stop Loss:
A Stop Loss is a Market Order that helps limit an investor's losses. When you attach a Stop Loss to one of your trades, you give instructions to close the trade once it reaches a certain price.

Example:

• You buy a stock at $100.
• You set a Stop Loss at $80.
• If the stock price drops to $80, the system will automatically close your order.

Attaching a Stop Loss to your trades is an efficient way to manage risk and cut losses when you can't constantly monitor your trades.

Take Profit:
A Take Profit (TP) is similar to a Stop Loss but works in the opposite direction. It allows you to lock in profits by closing your trade once it reaches a certain profit level.

Example:

• You buy a stock at $100.
• You set a Take Profit at $120.
• If the stock price rises to $120, the system will automatically close your order.

Using Take Profit orders ensures that you can secure profits without needing to watch the market continuously.

Setting both Stop Loss and Take Profit orders is a good strategy to manage your trades effectively and minimize risks.