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Stop Loss and Take Profit - what kind of "beasts" are they?
Let's not turn into Wikipedia, let's explain the meaning of these terms briefly, without complicated terms and with specific examples.
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Stop loss is a favorite tool of a trader who wants to avoid losses and manage risks wisely.
To be more specific, it is simply an order or a request that fixes the amount of losses in a trade and closes it on its own as soon as the price reaches a certain level set by you in advance.
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How it works: for example, you bought ETH for $500 and set a stop loss at $440, then if the price goes not in your direction to $440 or lower, your position will be automatically closed with a loss of $60.
Okay, now let's look at Take Profit. What is it?
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Take Profit is a thing that is somewhat similar to Stop Loss, but with nuances. In Stop Loss, you set the price of an asset below its current price at which the position is closed.
Take profit is the same, but in the other direction. That is, it is a set price at which traders close a profitable position.
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How it works: for example, if you bought BTC for $300 and set your take profit at $650, then if the price rises to $650 or higher, your position will be automatically closed with a profit of $350+.
What do you think, friends, did we explain everything correctly? Do you have any additions let us know in the comment section?
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