I've just realized that many new traders entering the market are not clear about Entry, Stop Loss, and Take Profit. Today, I will share some experiences regarding these three basic concepts.

Entry is the point where you initiate a trade, meaning the price at which you start buying or selling. If the trade ends exactly at this entry point, you break even. This is the foundation of all trading.

But what really matters is how you manage risk. That’s why Stop Loss and Take Profit are extremely important. Stop Loss allows you to automatically cut losses if the market moves against your prediction. For a Buy order, the Stop Loss price must be lower than the Entry. For a Sell order, it must be higher than the Entry. However, don’t set the Stop Loss too close to the Entry because markets can be volatile, and you might get wiped out unnecessarily.

Take Profit is a tool that helps you automatically lock in profits when your target is reached. For a Buy order, the Take Profit price must be higher than the Entry. For a Sell order, it must be lower than the Entry. I usually use a strategy where I set the Stop Loss closer than the distance from Entry to Take Profit, so that winning trades can offset losing ones caused by Stop Loss hits.

The benefits of pre-setting Take Profit and Stop Loss are clear. First, you save time because you don’t need to constantly monitor your trades. Second, you reduce stress by defining acceptable levels of profit and loss, usually from 0.5% to 1% of your account. Third, you can optimize profits by managing a reasonable risk-reward ratio.

But there are also risks to watch out for. Stop Loss hunting is a common phenomenon when markets are highly volatile, where the price hits the Stop Loss level and then reverses back. Additionally, sometimes your position looks perfect, but the Take Profit triggers early while the price continues to rise. These situations can be frustrating, but that’s why Take Profit is important. If you don’t set a Stop Loss, especially in Futures trading, you could blow your account in an instant.

Initially, I was also overly greedy, but I learned a lesson: eat little but stay long-term. When you want to trade more professionally, setting both Take Profit and Stop Loss is mandatory. They help you save time, reduce stress, and improve efficiency in each trade. Remember, risk management is the key to surviving long-term in the market.