Take Profit/Stop Loss Orders

What is a Take-Profit (TP) Order?

• A TP order is a type of limit order used to automatically close a position when a specified profit level is reached.
• TP orders are regularly used in combination with Stop-Loss (SL) orders to manage risk.

What is a Stop-Loss (SL) Order?

• A SL order is used to limit losses by automatically selling a security when it reaches a predefined price.
• SL orders help investors manage risk by exiting positions when a market moves against their expectations.

Using TP and SL Orders in Combination

• This is an effective strategy to manage risk and lock in profits.
• One common mistake some investors encounter when setting up their strategy is making the stop-loss price too close to their take profit price.
• In volatile markets or when markets open, if the stop-loss and take-profit prices are too close, there is a chance BOTH orders will fill. To avoid this, ensure the limit price on both orders have a wide enough price range to account for market movements