Recently, I saw many people in the community asking how to use take profit and stop loss, so I decided to organize some of my experiences and share them with everyone.

Honestly, take profit and stop loss are really crucial in cryptocurrency trading, but many beginners either don’t know how to use them or set them up but don’t dare to execute. When I first started trading, I was the same way—seeing the price go up, I wanted to wait a bit longer, but then a reversal would wipe everything out, and that feeling is really uncomfortable.

First, let’s talk about what take profit and stop loss are. Take profit means automatically selling once you reach your set profit, ensuring the money actually goes into your pocket. Stop loss is when the loss reaches an acceptable level, you cut your losses and exit, so you don’t lose more. I found that many people are very resistant to stop loss, always thinking that if they just endure a bit longer, they can recover, but the market won’t change direction just because of your expectations.

The key is to set a trigger price. Simply put, the trigger price is like a switch—when the market price hits this point, your take profit or stop loss order will actually be placed on the market. For example, if you buy a coin at 1,000 yuan and want to sell at 1,200 yuan to make a profit, then the take profit price is set at 1,200. But if you want a stop loss, it’s a bit more complicated. Suppose your maximum loss is 100 yuan, so you should set the stop loss at 900 yuan, but if you just place a sell order at 900, it won’t execute at the current market price of 1,000. This is where the trigger price concept comes in: set a trigger price at 900, and a stop loss at 890. When the price drops to 900, the system will automatically place a sell order at 890.

I think many people underestimate the role of take profit and stop loss. They’re not just about protecting funds; more importantly, they make your trading more rational. Once set, they execute automatically, completely eliminating emotional influence. You won’t be tempted to chase highs just because the price rises, nor will you hold onto losses with illusions. After practicing take profit and stop loss over the long term, you can truly evaluate whether your trading strategy works or not.

There’s also a concept called trailing stop loss, which I use quite often. Simply put, it’s not a fixed price but a percentage relative to the market price. For example, if a coin is at 1,000 yuan and you set a trailing stop loss at -200, then if the price later rises to 2,000 yuan, the stop loss will automatically move up to 1,800 yuan. The benefit of this is that as the market moves in your favor, the stop loss moves up accordingly, protecting profits without being limited by a fixed number.

As for how to set it up, I recommend based on your acceptable profit and loss levels. Some people like to refer to support and resistance levels or moving averages, but I think a more practical approach is to ask yourself: how much profit makes me satisfied? How much loss would make me feel painful? The answers are your take profit and stop loss points.

Most mainstream exchanges now offer these features, whether for spot or futures trading. Spot take profit and stop loss are more straightforward, while futures can be set when opening a position, saving the hassle of manual adjustments later. If you’re still hesitant, try practicing with a demo account—zero cost to experience the whole process.

Ultimately, the hardest part of stop loss isn’t technical but psychological. Many losses are actually due to not executing stop loss properly. I hope everyone can develop this habit, so they can go further in the market.