Take Profit: The key tool that many traders ignore (and regret)

When you first start trading cryptocurrencies, everything seems simple: buy low, sell high. But the reality is much harsher. The market is unpredictable, and without the right tools, you end up losing money or leaving profits on the table. That’s why there are two automatic orders every trader must master: take profit and stop loss. Both act as your emotional safety guards, allowing trades to close automatically without you having to be glued to the screen.

Why is Take Profit your best ally?

Imagine you bought a cryptocurrency at $1000 with the intention of gaining 20%. You set your take profit at $1200 and wait. The market rises slowly, but when it finally hits $1199, you hesitate. What if it keeps going up? Should I wait a bit longer? That indecision costs you money or, worse, the price suddenly drops and you lose everything gained.

Take profit solves exactly this: it’s an automatic order that closes your position when it reaches a predetermined profit level. Literally “take your profits” without doing anything. When the price hits $1200, the order executes automatically, ensuring you get that 20% you planned.

Why beginners need Take Profit more than professionals

Inexperienced traders often make the opposite mistake many imagine. They’re not afraid of losing money; they fear not earning “enough.” They see the price keeps rising after closing a position and regret it. Or, conversely, they wait too long for it to go higher, and the market reverses, wiping out all their gains.

Take profit acts as an emotional buffer. It removes the temptation to be greedy and the paralysis of indecision. Once set, the order works regardless of your emotional state or if you’re offline.

Stop Loss: Your safety net against the unexpected

If take profit is about securing gains, stop loss is about protecting your capital. It’s an order that automatically closes your position if the market moves against you more than you’re willing to tolerate.

You bought a coin at $1000, but you recognize you could tolerate a maximum loss of 20%. Setting a stop loss at $800 means that if the price falls to that level, your position closes automatically, preventing you from losing more money.

Stop loss is especially critical because the cryptocurrency market is volatile and can surprise you at any moment. A hack, a negative regulatory announcement, or simply a market correction can cause your investment to fall rapidly. Without a stop loss configured, you could wake up to a catastrophic loss.

What is the real difference between the two?

Although both are automatic orders, their purpose is opposite:

• Stop Loss: Protects against excessive losses. It’s defensive.
• Take Profit: Secures realized gains. It’s offensive.

In practice, the difference is fundamental: a poorly set stop loss ( too close to the current price ) can be triggered by short-term volatility, causing unexpected losses. A poorly set take profit simply means you earned less profit than you could have, but at least you closed in profit.

Risk-reward ratios: The math behind orders

There’s no single rule, but the trading community uses standard mathematical ratios:

• 1:1: 10% stop loss and 10% take profit. Equal risk and reward.
• 1:2: 10% stop loss and 20% take profit. Risk less to gain more.
• 1:3: 10% stop loss and 30% take profit. Maximize reward with controlled risk.

The ratio you choose depends on your strategy and risk tolerance. Professionals generally prefer ratios of 1:2 or higher because they seek each gain to compensate for multiple small losses.

How to properly set Stop Loss and Take Profit

Step 1: Open your base position

Choose the trading pair, define the amount of cryptocurrency, and set the price. This is the starting point.

Step 2: Set the Take Profit

Use a “limit” order to sell. Fill in two fields:

• Price: The level where you want to close with profit (e.g., $1200).
• Amount: How much crypto to sell at that price.

When the market reaches that price, the sale executes automatically.

Step 3: Set the Stop Loss

Use a “stop-limit” order to protect your capital. Fill in three fields:

• Stop: The price that activates the order (e.g., $950).
• Limit: The price at which it actually sells (e.g., $940, slightly below the stop to avoid slippage).
• Amount: How much crypto to protect.

Important note: Experts recommend that the “stop” price and the “limit” price should not be identical, because there’s a risk of slippage (slippage), where the order doesn’t execute at the exact price.

Step 4: Both orders simultaneously (OCO order)

If your platform allows, select the “OCO” order type (One-Cancels-Other). This lets you set both take profit and stop loss at the same time. As soon as one executes, the other is automatically canceled.

The Floating Stop Loss: For advanced traders

There’s an additional technique called “floating stop loss” or “trailing stop.” The idea is that as the price moves in your favor, your stop loss automatically rises with it, protecting gains while allowing more growth.

Example: You bought at $1000 with a stop loss at $950. The price rises to $1100. A trailing stop could automatically raise your stop loss to $1050, ensuring that if the market reverses, you at least close at $1050 instead of $950. It’s a balance between capturing more gains and protecting what you already earned.

Mistakes that wreck accounts

Error 1: Not setting any stop loss

Some traders are overconfident or distracted. They say, “I’ll be glued to the screen.” But life happens: work calls, emergencies, simply disconnecting the router. Without a stop loss, a market crash could liquidate your account while you’re away.

Error 2: Stop loss too close

Wanting to lose as little as possible sounds logical, but a close stop loss triggers by normal market volatility. You set one at $990 for a $1000 purchase, the price drops for 5 minutes, your stop loss executes, and then the market rises to $1100. You just got liquidated by noise movements.

$989 Error 3: Take profit too aggressive The opposite: setting take profit at ### when you bought at $1001 sounds safe, but generates losses due to commissions and forces you to make hundreds of trades to earn significant money. It’s exhausting and inefficient.

$1000 Error 4: Constantly changing orders out of emotion The costliest mistake: seeing the price fall and moving your stop loss further away because “I think it bounces.” Or seeing it rise and moving your take profit higher because “I want more.” Each change is an emotional gamble you usually lose.

Real advantages vs. limitations

Advantages:

• Full automation: Orders work 24/7, even while you sleep.
• Emotional consistency: Eliminates impulsive decision temptation.
• Risk management: Set clear limits before opening the position.
• Realized gains: Take profit ensures you get what you planned.

Limitations:

• Slippage ###slippage(: In very fast markets, your order might execute at a different price.
• Short-term volatility: Close stop losses can be triggered by noise movements.
• Doesn’t capture maximum potential: A take profit means if the price keeps rising, you won’t see it.

Conclusion: Stop Loss and Take Profit are mandatory

Using these two automatic orders is the difference between traders who survive long-term and those who disappear. Take profit ensures you extract profits consistently. Stop loss ensures your losses are never catastrophic.

It’s not a question of if you should use them. It’s when you will start. Every professional trader, without exception, uses them. Beginners who adopt them from the start have significantly higher chances of success than those trying to trade without a defensive strategy.

Define your ratios, set your orders, follow your plan, and let automation do its job. That’s the only way to win consistently in the cryptocurrency market.