What is SL, TP in trading? Why SL, TP?

SL and TP concept

TP stands for Take profit, which means take profit order, which is a pending order that fixes profits at a price that is hopefully set by the trader himself in the trade and can be changed at will.

SL stands for Stop Loss, which means stop loss, which is a pending order that stops the amount of loss at a hopeful price set by the trader himself in the trade and can be changed at will.

Stop Loss (SL) and Take Profit (TP) are two important factors that directly affect the investor’s trading results.

Why SL?

When trading Forex, besides huge profits, traders also face potential risks. Therefore, risk management is a must. Stop loss is one of the measures to minimize risks, especially in times of high market volatility.

Accordingly, when conducting a trade, you should set a stop loss order, limit your loss to an acceptable price, in case the market share goes in the opposite direction with your analysis and strategy.

For example, you buy gold at 1900, you set your stop loss at 1898. When the market moves in the opposite direction to your analysis, your order will be cut right at 1898 even if the market later falls to 1890, 1880, avoiding a large loss or more dangerously, burning your account if the market falls deeply if you do not cut your manual order loss in time.

With some reputable brokers, when you have installed SL, but because the market fluctuates too strongly, causing high slippage or cannot close the order despite having installed SL, you can complain to SUPPORT => This is also 1 advantage when installing SL, but still have to trade on a reputable broker (You can refer to and register a reputable broker here).

Why use TP?

Once you have analyzed the market, you will have a reasonable take profit point. Then we will set the take profit price with the TP order to help the order automatically make a profit when it reaches that price without having to monitor and observe much. At the same time, completely eliminate personal emotions when conducting transactions, limiting the occurrence of situations similar to the SL part. Help us be more disciplined in trading.


Do not pull the SL level further than previously analyzed.

The fact that 1 trader has chosen to pull the stop loss away when the market moves in the opposite direction from the initial calculation is usually affected by psychology, gradually creating a bad habit. So when you have placed SL, if the market goes wrong with the analysis, you accept losses. The next thing to do is to look at the market to see where the error is, and learn from the experience to better improve in your trading system.

Faithful to the original decision, not greedy for small gains

Once the TP has been placed, realizing that the market prospered in the direction that speculators desired, usually traders ignore the previously calculated profit-taking TP and revise themselves to wait with the expectation of a little more profit. However, it is easy for traders to lose money when the market suddenly fluctuates and plummets. Therefore, once you decide to place a take profit order, the trader should stick to his strategy.

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