Trading education
Stop-loss and take-profit: planning the exit before the entry
How stop and take-profit orders work, why they can fill at a different price, and how traders place them.
2026-10-221 min read
A trade has two exits: one if you are wrong and one if you are right. Stop-loss and take-profit orders let you set them in advance.
Stop-loss
A stop-loss closes a position when the price reaches a level that shows the trade idea did not work. On exchanges it is usually built from a stop price (the trigger) and an order that is sent when the trigger is hit:
- Stop-market — sends a market order. It almost always executes, but the price may be worse than the trigger in fast markets.
- Stop-limit — sends a limit order. You control the worst price, but if the market jumps past your limit the order may stay unfilled. Read Market, limit and stop-limit orders.
Take-profit
A take-profit closes a position at a planned target. It is often a limit order placed above the current price for a long position (or below for a short).
Why fills differ from the plan
- Slippage: in a thin order book the market order eats through several price levels.
- Gaps: after news the price can move instantly past your level.
- Wicks: short spikes can trigger stops that sit at obvious round numbers.
How traders choose levels
- Beyond a level that would prove the idea wrong (for example, below recent support for a long).
- With enough room for normal volatility, then sizing the position to that distance.
- With a target that makes the potential gain larger than the potential loss.
This is general education. XFasil does not provide trading operations or investment advice; the Spot and Futures screens show market data only.
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