Stop Loss vs Take Profit
Updated October 16, 2026
A stop loss closes a trade to limit your loss. A take profit closes it to lock in a gain. Most traders set both on every trade.
A stop loss is an order that closes your trade if price moves against you to a set level. It caps how much one trade can cost you.
A take profit closes your trade once price hits your target, so you bank the gain without staring at the chart.
Hands free AI trading tools usually set both for you. That helps manage risk, but stops can slip in fast markets and you can still lose money.
| Stop Loss | Take Profit | |
|---|---|---|
| Purpose | Limit losses | Lock in gains |
| When it triggers | Price moves against you | Price hits your target |
| Required | Strongly advised | Optional but common |
| Slippage | Possible in fast moves | Rare |
| Works with bots | Yes | Yes |
| Skill needed | Low | Low |
Which one should you pick?
You need both, not one or the other. A stop loss protects your account, and a take profit helps you stick to a plan. Never trade without a stop loss.
Questions people ask
Where should I put my stop loss?
Many traders risk only 1 to 2 percent of their account per trade and place the stop where the trade idea is wrong.
Does a stop loss always work?
Usually, but in big fast moves or gaps price can jump past it, so the loss can be bigger.
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