We call them the freedom buttons. The stop-loss and the take-profit are the two settings that turn a trade from something you have to watch into something that runs on its own. This article explains what each one does, why both are included in every trade idea we send and what changes once they are set.
Stop-loss: your maximum loss, decided in advance
A stop-loss is a price level at which your trade closes automatically if the market moves against you. You set it when you open the trade, which means your maximum loss is decided before the trade even starts. There is no need to watch for disaster, because the worst case has already been defined and capped.
For a gold trader this matters more than usual. Gold can move quickly on news, and a trade left without a stop-loss can go from a small dip to a serious problem while you are in a meeting. The stop-loss is the difference between a planned loss and a nasty surprise.
Take-profit, and the two together
A take-profit is the mirror image: a price level at which the trade closes automatically once it reaches your target. You do not need to watch for the exact moment or wonder whether to hold on a little longer. The decision was made calmly when the trade was placed, and the platform carries it out for you.
With both set, the trade has a plan. It will end either at your defined loss or at your defined target, with nothing left to decide in the heat of the moment. You can close the app and get on with your day. Every idea we send includes both levels, and we teach every new member how to set them in MT5.
Key takeaways
- The stop-loss decides your maximum loss before the trade starts.
- The take-profit closes the trade automatically at your target.
- With both set, the trade has a plan and you can close the app.
Common questions
What is the difference between stop-loss and take-profit?
A stop-loss closes the trade automatically at a defined loss if price moves against you. A take-profit closes it automatically at your target if price moves in your favour.
Do you have to watch a trade once it is placed?
Not if the stop-loss and take-profit are set. The trade will close on its own at one level or the other, so you can check the result later.
Trade ideas with the levels already worked out
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