How to set stop loss and take profit in spot trading

A professional trader knows that properly setting stop-loss and take-profit orders is the foundation of successful trading. These two types of orders act as financial protection: the first limits losses, the second locks in profits. Let’s understand how to use these tools most effectively in spot trading.

Why risk management starts with stop-loss and take-profit

In volatile markets, traders often fluctuate between greed and fear. A stop-loss helps avoid catastrophic losses when the market moves against your position. A take-profit allows you to secure gains at the peak price without waiting for further decline. Instead of emotional decisions, you rely on automatic mechanisms that trigger based on predefined rules.

Comparison: TP/SL orders, OCO, and conditional orders

Beginner traders often confuse these three types of orders. It’s important to understand the key differences to choose the optimal tool.

TP/SL orders execute at the moment of placement, immediately locking in assets. OCO orders save funds by engaging margin only on one side. Conditional orders offer maximum flexibility — assets are used only after the trigger activates.

How to correctly place TP/SL orders directly from the interface

When you already own an asset, the most convenient way is to place a TP/SL order directly from the order zone in the web version or mobile app.

What to specify:

• Trigger price — the level at which the order activates
• Order price — the desired execution price (or leave blank for a market order)
• Position size — how many assets to buy/sell

When placing the order, assets are immediately locked in your portfolio. As soon as the last trading price reaches the trigger level, the system will automatically place either a market or limit order according to your parameters.

Market order TP/SL — instant execution

A market order executes immediately at the best available price when the trigger is hit. This guarantees your exit from the position, but at an unpredictable price depending on current liquidity.

Example: BTC is trading at 20,000 USDT. You set a market stop-loss with a trigger at 19,000 USDT (no order price specified). When BTC drops to 19,000 USDT, the system instantly sells your assets at the best available market price — which could be 18,950 or 18,900 USDT depending on liquidity.

Limit order TP/SL — price control

A limit order goes into the order book and waits for execution at your specified price. If the best bid/ask is more favorable, it executes at the better price. But if the price doesn’t reach your level, the order may remain unfilled.

Example 1 (take profit on buy): BTC = 20,000 USDT. You set a take profit: trigger at 21,000 USDT, limit order price at 20,000 USDT. When BTC reaches 21,000 USDT, a limit buy order is placed at 20,000 USDT in the order book. If the price drops back to 20,000 USDT, the order executes.

Example 2 (best price at execution): You set a limit sell order with trigger and price at 21,000 USDT. When triggered, the best ask is 21,050 USDT — the order executes immediately at 21,050 USDT (you get more!). But if the best bid is 20,950 USDT, the order waits in the book at 21,000 USDT.

Important note: Limit orders may not execute at all if the price doesn’t reach the level or liquidity is insufficient. This is a normal limitation of this order type.

Advanced technique: pre-setting take profit and stop-loss along with the entry order

Experienced traders often place a limit entry order and simultaneously set two exit orders: take profit and stop-loss. This resembles OCO logic — only one side of the margin is used.

After your entry limit order executes, both exit orders (TP and SL) activate automatically. Whichever triggers first, the other is automatically canceled. This way, one trade is fully managed in terms of risk.

Practical scenario:

1. Entry limit order: 40,000 USDT for 1 BTC
2. Pre-set take profit: trigger at 50,000 USDT, sell at 50,500 USDT (limit)
3. Pre-set stop-loss: trigger at 30,000 USDT (market sell)

Scenario A — price rises: BTC hits 50,000 USDT → take profit triggers, locking in profit at 50,500 USDT → stop-loss is canceled.

Scenario B — price falls: BTC drops to 30,000 USDT → stop-loss triggers, selling at the best available market price → take profit is canceled.

This tool is for traders who want to cover everything: entry, profit, and losses — in one set of automatic commands.

Critical limitations and rules you must not ignore

Before setting TP/SL, keep these restrictions in mind:

What to watch for:

• Trigger levels: For buy orders, trigger must be below entry price; for sell orders, above. The same applies to stop-loss.
• Percentage limits: If the pair BTC/USDT has a ±3% limit, the order price cannot deviate more than 3% from the trigger.
• Minimum order size: If after executing the entry order the position size is below the minimum, TP/SL may not be placed.
• Limits of limit vs market orders: The maximum size of a market order is often less than a limit order. If you set a market TP/SL exceeding the market order limit, the system will reject the entire operation.

For example, if the limit order is 1 BTC, but the market order limit is 0.5 BTC, placing a limit entry for 1 BTC with a market TP/SL will be rejected.

Final recommendation: Before deploying TP/SL in live trading, study the specific restrictions of your trading pair in the “Spot Trading Rules” section. Each asset has its own price limits and minimum sizes. Mastering stop-loss and take-profit orders gives you real control over risk and makes your trading predictable and disciplined.