Stop-Loss and Take-Profit Placement

A stop-loss and a take-profit are the two exit levels you set when you open a trade — one caps your loss if you're wrong, the other locks in a gain if you're right. Both should be decided before you enter, not while you're watching the trade live.

A stop-loss placed too close to your entry gets triggered by ordinary price noise, not by you actually being wrong. A common approach is to place it just beyond a recent swing high/low or support/resistance level, so it only triggers if the market genuinely invalidates your idea.

Take-profit levels are often set using a risk-to-reward ratio — for example, aiming to win twice what you're risking. That way, even a strategy that's right less than half the time can still be profitable overall.