Stop loss (Stop Loss) and take profit (Take Profit) are two essential tools in trading that help you reduce losses and secure profits automatically. These tools are very useful in spot trading on the Binance platform, where you can set specific levels at which buy or sell orders are automatically executed.
1. What is stop loss? ❌
A stop loss is a sell or buy order set at a certain price to minimize your losses if the market moves against your expectations.
Example: You bought a coin at $10 and want to minimize your losses if the price drops. You can set a stop loss order at $9. If the price drops to this level, the coin will be sold automatically.
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2. What is take profit? ✅
Take profit is a sell or buy order set at a certain price to secure your profits if the market moves in the expected direction.
Example: You bought a coin at $10 and expect it to reach $12. You can set a take profit order at $12 to automatically sell the coin at that price.
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3. How to use stop loss and take profit in spot trading on Binance:
A) Steps to set a stop loss order:
1. Log in to the Binance platform.
2. Go to the spot trading interface.
3. Choose a trading pair (e.g., BTC/USDT).
4. Select 'Stop-Limit' in the order type.
5. Fill in the following fields:
Stop: The price at which the order is activated.
Limit: The price at which the order is executed.
Amount: The quantity you want to buy or sell.
6. Press the 'Sell' button or 'Buy' button.
Example:
You bought a coin at $10.
You want to set a stop loss at $9.
Specify:
Stop price: $9.10.
Limit price: $9.
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B) Steps to set a take profit order:
1. In the spot trading interface, select 'Stop-Limit'.
2. Fill in the fields as follows:
Stop: The price at which the order is activated.
Limit: The price at which the sale is executed.
Amount: The quantity you want to buy or sell.
3. Press the 'Sell' button or 'Buy' button.
Example:
You bought a coin at $5.
Expect it to reach $7.
Specify:
Stop price: $6.90.
Limit price: $7.
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4. The difference between 'Stop-Limit' and 'Market Order'
Stop-Limit: Allows you to set precise prices for stop and execution, but it may not be executed if the market does not reach the specified price.
Market Order: The order is executed at the current market price immediately upon activation.
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5. Tips for using stop loss and take profit orders:
1. Determine your risk level: Do not risk more than 1-2% of your capital in each trade.
2. Market analysis: Use technical analysis tools to determine optimal support and resistance levels.
3. Avoid greed: Do not set take profit at levels that are too far away or stop loss too close.
4. Update orders: Regularly review orders according to market changes.
Summary:
Stop loss: It helps you protect your capital.
Take profit: It helps you secure gains.
Using these tools wisely is considered one of the fundamentals of successful trading.
From Yasmin Ayman's page*
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