Overall, when starting trading, many people often make the mistake of not knowing how to manage risk. Today, I want to share with you three extremely important concepts that anyone serious about trading must understand: Entry, Stop Loss, and what we often call Take Profit in actual trading.

First is Entry - the point of entering a trade. It's simple, it’s the price at which you decide to buy or sell an asset. If you enter at 50k and close the trade at 50k, you break even. This is the easiest to understand.

But the difficult part is knowing how to protect your order. That’s why Stop Loss exists. It is an automatic stop-loss order — when the price moves against you and hits your preset level, the order will automatically close. For a Buy order, the Stop Loss must be lower than the Entry. For a Sell order, the Stop Loss must be higher than the Entry. However, don’t set the Stop Loss too close to the Entry because the market often fluctuates strongly, and you might get stopped out only to see the price return to your entry point. That’s a pretty frustrating experience.

And what is Take Profit? It’s a profit-taking order — helping you automatically lock in profits when the price reaches your target. For a Buy order, Take Profit must be higher than the Entry. For a Sell order, Take Profit must be lower than the Entry. This way of placing orders helps you avoid constantly watching the screen.

Actually, the biggest benefit of setting both orders in advance is that it reduces psychological pressure. You’ve already decided how much risk you’re willing to take and what your profit target is, so just let it run. Usually, I set the Stop Loss around 0.5-1% of the account. A good tip is to set the Stop Loss smaller than the Take Profit from the Entry, so many take-profit orders will compensate for the few that hit the Stop Loss.

Of course, this also has its downsides. Sometimes, you enter a very good position, but the take-profit order gets hit early, and the price continues to rise. Or vice versa, you get stopped out, and then the market turns back. But anyway, **what’s the point of having a take profit if you don’t set it?** Especially in futures trading, if you don’t have a Stop Loss, you’re very likely to blow your account. It’s better to make less profit but sustain longer.

When you want to trade professionally, Stop Loss and Take Profit are two orders you must set. They help you save time monitoring and create discipline in trading. If you’re trading on Gate, make sure you understand how to set these two orders before entering any position.