I. Market Take Profit & Stop Loss
Definition:
Market take profit and stop loss refer to orders that are executed immediately at the current market price once the market reaches the preset take profit or stop loss level.
Take Profit: When the market price reaches the preset take profit price, the system automatically sells the asset to lock in profits.
Stop Loss: When the market price reaches the preset stop loss price, the system automatically sells the asset to limit losses.
Features:
✅ Instant execution: Once triggered, the order is executed immediately at the best available market price.
❌ No price control: Due to market volatility, slippage may occur (the execution price may differ from the expected price).
Example:
Suppose you buy Bitcoin at $1,000, set a stop loss at $950, and a take profit at $1,100.
Stop Loss: If the market price drops to $950, the system sells Bitcoin at the best market price to prevent further losses.
Take Profit: If the market price rises to $1,100, the system sells Bitcoin at the best market price to lock in profits.
II. Limit Take Profit & Stop Loss
Definition:
Limit take profit and stop loss refer to orders that, once the market price reaches the preset take profit or stop loss level, are executed at a predefined limit price (or a better price).
Take Profit: When the market price reaches or exceeds the take profit level, the system places a sell order at the specified limit price to lock in profits.
Stop Loss: When the market price reaches or falls below the stop loss level, the system places a sell order at the specified limit price to limit losses.
Features:
✅ Price control: You can specify the execution price for your take profit or stop loss orders.
❌ No guarantee of immediate execution: If the market does not reach your limit price, the order may remain open until conditions are met.
Example:
Suppose you buy Bitcoin at $1,000, set a stop loss at $950, and a take profit at $1,100, using limit take profit and stop loss orders.
Stop Loss: If the market price drops to $950, the system places a sell order at your limit price (e.g., $950 or higher). If the price continues to fall rapidly, the order may not be filled immediately.
Take Profit: If the market price rises to $1,100, the system places a sell order at your limit price (e.g., $1,100 or lower), ensuring profits are locked in at that level.
Summary
Market Take Profit & Stop Loss are suitable for traders who prioritize fast execution and are less concerned about price fluctuations.
Limit Take Profit & Stop Loss are suitable for traders who want precise price control and are willing to wait for market conditions to be met.