- A stop loss closes your trade at a price where the idea is proven wrong. A take profit closes it where you planned to bank the gain.
- Both are set before you enter. That is what turns a guess into a trade with a known worst case.
- There is no "best" stop-loss percentage. The stop belongs where the trade idea fails; your position size then decides how much that costs you.
How stop loss and take profit work
Both are orders that sit on the exchange waiting for a price. When the market touches your stop-loss price, the exchange closes the position to limit the loss. When it touches your take-profit price, it closes the position and locks in the gain. Once both are placed you do not need to watch the chart: the trade will end at one or the other (or you close it yourself first).
On a long trade the stop sits below the entry and the target above it. On a short trade it is the other way round: the stop is above the entry and the target below.
| Long trade | Short trade | |
|---|---|---|
| You profit when | Price rises | Price falls |
| Stop loss goes | Below entry | Above entry |
| Take profit goes | Above entry | Below entry |
A winning trade: the stop was never touched
BTC/USDT short at 39x, 3 September 2026. Entry 81,316.70, stop loss 82,567.73, target 78,732.43.
- The stop was 1.54% above entry. At 39x that is about -60% of the margin if hit.
- The target was 3.18% below entry. At 39x that is +123.94% of the margin.
- The target hit 22 hours later. Reward was roughly twice the risk.
A losing trade: the stop did its job
SOL/USDT long at 31x, 19 September 2026. Entry 111.870, stop loss 110.203, target 116.781.
Price moved 1.49% the wrong way and the stop closed the trade nine hours later: -46.19% of the margin at 31x. That sounds large, but it was the planned worst case, known before entry. Without the stop, the same position could have kept falling. The trade is on our public record next to the winners, because a record without losses is not a record.
Where to place a stop loss
People search for the "best stop-loss percentage", but a fixed percentage ignores the market. A 1% stop on a calm forex pair can be wide, while on a small-cap coin it is noise that gets hit by normal movement. Better rules:
- Put it where the idea fails. If you are long because price held a support level, the stop goes just below that level, not at an arbitrary 2%.
- Leave room for normal movement. A stop inside everyday noise gets hit by random wiggles.
- Then size the trade to the stop. A wider stop means a smaller position, so the money at risk stays the same.
- Never widen it after entry because the trade is going against you. That is how small losses become account-ending ones.
Where to place a take profit
A target should sit where price is likely to stall: a previous high or low, a round number, or a level where the trade has delivered a sensible multiple of the risk. Many traders look for at least 1.5 to 2 times the risk. Some signals have several targets (TP1, TP2, TP3), and a common approach is to take part of the position off at each one and move the stop to the entry once TP1 is hit, so the rest of the trade cannot turn into a loss.
Setting stop loss and take profit on Binance or Bybit futures
Get the next trade the moment we take it
Every signal we send has a stop loss and at least one target. Signal Pilot sends the exact trades our desk takes, with entry, stop loss, targets and leverage, the moment we enter. You pay per signal: $1 for crypto, $3 for forex and stocks, minimum 10. No subscription, credits never expire, and if a trade is cancelled before entry the credit comes back.
Frequently asked questions
What is the difference between stop loss and take profit?
A stop loss closes a trade to limit a loss; a take profit closes it to lock in a gain. Both are set in advance at specific prices.
Is there a best stop-loss percentage?
No single number works for every market. Place the stop where the trade idea fails, then size the position so that hitting the stop costs a small part of your account.
Should I move my stop loss?
Moving it in your favour (for example to breakeven after the first target) is common. Moving it further away to avoid being stopped out is not.
Can a stop loss fail?
In fast markets the fill can be worse than the stop price (slippage), and very high leverage can bring liquidation close to the stop. See our guide to liquidation price.
Do your signals include stop loss and take profit?
Yes, every one, plus updates when a target is hit or the stop is moved.
Risk warning: trading crypto, forex and other markets with leverage carries a high risk of loss, and you can lose more than you deposit. This article is education, not financial advice. Past results do not guarantee future results.