Take profit and stop loss (TP/SL) is a trading strategy that allows you "take profit" or "stop loss" at a predefined price. With this strategy, you can engage in momentum trading or limit your losses in a volatile market by exiting a trade to limit risks and lock in gains.
You can set a predefined trigger price and an order price to limit losses and reduce risks. Your order will be placed automatically at the predefined order price once the market price reaches the predefined trigger price to "take profit" or "stop loss".
There are two types of TP/SL orders: stop orders and trigger orders. The only difference between a trigger order and a stop order is that a trigger order does not freeze your margin or positions.
Why is it necessary to use TP/SL?
Take profit and stop loss are powerful tools for trading. When prices are moving against you and you start to lose money, stopping the loss in time prevents further losses. On the other hand, when the prices are moving in your favor, take profit can help you to lock in gains. Take profit and stop loss are some of the most important tactics to effectively control risks during your trading journey.
What to take note of when setting TP/SL?
If the market price does not reach the trigger price, the order will not be placed.
If the order is executed, the existing position will be closed or a new position will be opened according to the TP/SL set by the user. If the order fails to be executed, your position and margin will still exist.
If the order condition is triggered and the order is placed, and the order price set by the user triggers the limit price rule, the system will place the order using either the highest or the lowest limit price available at that time. For more details, see Ⅲ. Price limit rules.
Which scenarios will lead to unsuccessful TP/SL triggers?
When the amount of your TP/SL position exceeds your maximum amount limit, the order will fail.
When the market fluctuates violently, the TP/SL order may not be executed immediately. This is because the TP/SL order uses the market price to place the order after triggering. If you want to close all positions quickly, you can select a specific position and click 'Close all'.
If there are orders in the opposite direction (excluding reduce-only orders) in your order list, these orders might open a new position after the TP/SL order is triggered. At this time, margin verification may fail, resulting in the failure of the TP/SL order.
