Stop losses and take profits

Stop loss

A stop loss is an order that closes a position automatically at a specific level: below the entry for a long position, above it for a short. It is the most a trade is allowed to lose, decided before the trade is placed.

Take profit

A take profit is an order that closes a position automatically at a specific level: above the entry for a long position, below it for a short. It is where the trade is paid, decided before the trade is placed.

Where they go

The levels depend on the strategy you trade; the method in the later modules of this course puts them at the structure on the chart. Stop losses usually sit beyond the imbalance or the order block the trade was taken from. Take profits are usually taken at a supply and demand zone, at the following order block, or at a Fibonacci retracement or extension level.

Measured on every trade

With a stop and a target on every trade, each result can be measured as a multiple of what you risked. Trades records the stop and the target with each position and shows the result in R, so a plan that risks one to make two is checked against what actually happened.