How 'Stop Loss' and 'Take Profit' work?
Stop Loss and Take Profit are the orders which helps user to manage their risk and optimize the strategy return.
Stop Loss: When a person place an order, it may happen that the trade does not go in his desired direction but moves in an opposite direction, that is where the concept of Stoploss comes into picture. By the use of stop loss the person can limit the extent of loss by fixing the percentage up to which he can bear loss and as soon as the price surpasses that mark, the stop loss would be triggered and trade will be exited, thereby limiting the extent of loss in a particular trade
Take Profit: whenever a person enters into any trade there is always a target in a trader’s mind that this trade should give him X profit. So the trader can put his target as the take profit amount that as soon as the trade reached its target the system should book profit. By virtue of this the trader does not have to sit in front of his screen and wait and watch for the trade to reach its target and then sell it. By virtue of take profit the profit shall automatically be booked once the price reached the target set by the trader. So When order is placed by user, he expects to generate x% of return. System will book the profit when price reached to the expected return. For any trading system, it is important to enter stop loss and target profit percentage as a part of creating a strategy. It is very important that traders plan their entry/exit and risk before entering a trade so as to better manage their risk and return.
At KEEV, we provide you with a simple keying in stop loss and target profit percentage to add stop-loss and take-profit to your strategy.
After the strategy enters a position, the target stop loss price and the target take profit is calculated on the average of the entry price.
Add the take profit % and stop-loss %. You can also apply trailing Stop Loss.Related Articles
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