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hat is take profit and stop loss?
Take Profit (TP) and Stop Loss (SL) refer to the pre-set trigger price and commission price. When the latest price reaches the pre-set trigger price, the pre-set commission order will be sent to the market at the commission price to achieve the effect of stop profit and stop loss or chasing up and down. Stop profit and stop loss are a pair of orders set at the same time. If one order is triggered and executed, the other order will be automatically cancelled. Currently, you can use stop profit and stop loss in currency trading.
Coin-to-coin trading take profit (TP): aims to automatically sell assets and lock in profits when the market price reaches the expected price.
Coin-to-coin trading stop loss (SL): aims to automatically sell assets when the market price drops to a set price to limit potential losses.
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Why do we need to set profit/stop loss in limited orders?
Present trading strategies to seize the opportunity for success: By pre-setting the exit points, trading strategies can be automated without having to watch the market all the time.
Risk management, strategic planning: Taking profit/stop loss orders can help users set clear profit targets and loss limits to effectively manage risks.
Precise control and grasp the pulse of the market: By setting the trigger price, you can accurately control the timing of order execution and better respond to market fluctuations.
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What is the trigger price?
The trigger price means that when the market reaches this set price, the order will be reported to the market for commissioned trading. The trigger price is equivalent to the prerequisite of the order, which determines when to send the order instruction. However, whether the order can be fully and effectively executed depends on the order type, order price and market volatility.
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Take Profit/Stop Loss Setting Example:
Order example:
Order price: $50,000 (the price you wish to buy Bitcoin at)
Order quantity: 1 BTC (the quantity you wish to buy)
Set up Take Profit and Stop Loss:
Take Profit Trigger Price: $55,000 (the price at which you wish to take profit)
Stop loss trigger price: $45,000 (the price you want your stop loss to occur)
In this example, when the Bitcoin market price reaches $55,000, the take profit order will be triggered and you will sell 1 BTC to lock in profits. Conversely, if the market price drops to $45,000, the stop loss order will be triggered, selling 1 BTC to limit your losses.
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What factors should be considered when setting the take-profit and stop-loss prices?
Market Volatility: Consider the volatility of the cryptocurrency you are trading. More volatile markets may require wider stop-profit and stop-loss ranges to avoid premature triggering.
Risk Tolerance: Set your take profit and stop loss levels according to your risk tolerance and trading strategy.
Market conditions: Stay informed of market trends and conditions as these can affect the effectiveness of your stop-loss and take-profit settings.
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