In the volatile cryptocurrency market, TP/SL orders (take profit and stop loss orders) have become essential tools for spot traders. These two types of orders help traders lock in profits and prevent losses within an automated framework, serving as the core of systematic risk management. This guide will detail how TP/SL works, how it differs from other order types, and how to apply it flexibly in practice.
Understanding the Key Differences Between TP/SL and Other Order Types
In spot trading, TP/SL orders may seem similar to OCO (One Cancels the Other) orders and conditional orders, but there are significant differences in how funds are used.
Characteristics of Funds Occupied by TP/SL Orders
When you place a TP/SL order, the related assets are immediately frozen, even if the order has not yet been triggered. This means the frozen funds cannot be used for other trades temporarily. This design ensures that when the trigger conditions are met, there are sufficient assets available for trade execution.