How to achieve profit in spot trading: take-profit and stop-loss

For every trader, profit is the goal, and losses are what must be avoided. That’s exactly why there are specialized risk management tools. Take-profit (TP) and stop-loss (SL) are not just letters on the screen—they are your financial lifesavers in volatile markets.

Why Profit Requires a Strategy: The Basics of TP and SL

Take-profit allows you to automatically lock in gains when the market reaches your desired price level. At the same time, stop-loss protects your capital by automatically selling assets if the price moves in the opposite direction.

This is especially important in volatile markets where prices can change within minutes. Instead of constantly monitoring the screen, a trader can set TP/SL and let the system work.

Comparing Orders: How TP/SL Differs from OCO and Conditional Orders

While TP/SL, OCO, and conditional orders solve similar position management tasks, they operate differently. The main difference is in asset reservation.

TP/SL Orders: Assets are reserved at the moment of placement. This means the funds are already deducted from your balance and waiting for the trigger.

OCO Orders (One Cancels the Other): Only one side of the margin order is reserved at placement. When one order executes, the other is automatically canceled.

Conditional Orders: Assets are not reserved in advance. They are only blocked when the underlying asset’s price reaches the set trigger price. This provides more flexibility in capital management.

Your choice depends on your strategy: if you want guaranteed reservation of capital until the order triggers, choose TP/SL. If you need more flexibility, use conditional orders.

How Profit Occurs: The Mechanics of TP/SL Orders

Placing TP/SL Orders Directly from the Order Zone

When placing TP/SL orders, you need to set three key parameters:

• Trigger price (activation price)
• Execution price (for limit orders)
• Quantity to trade

Assets are reserved immediately after placement. When the last trade price reaches the trigger level, the system automatically places a limit or market order.

How it works in practice:

A market order executes instantly at the best available price on the market. This guarantees execution, but the price may be worse than expected due to slippage.

A limit order enters the order book and waits for execution at your specified price. If the best available offer on the market is better than your price, the order executes immediately. But if the market moves and your price becomes less attractive, the order may not fill. Therefore, traders should understand that TP/SL limit orders are not guaranteed to execute—everything depends on market liquidity and price movement.

Pre-placed TP/SL Orders Alongside a Limit Order

A more advanced approach is to place two orders—TP and SL—simultaneously with a limit buy or sell order. The system works on the “one cancels the other” logic:

1. You place a limit buy order.
2. Upon its execution, two orders are automatically activated: one for taking profit, another for limiting losses.
3. When one triggers, the other is immediately canceled.

This approach saves time and ensures you have an exit plan immediately after entering a position. However, note that if you set a limit TP/SL, once it triggers, the paired order will be canceled—even if the limit order has not fully executed.

Example of how this might work:

Suppose you buy 1 BTC at 40,000 USDT and set:

• Take-profit trigger at 50,000 USDT, sell at 50,500 USDT
• Stop-loss trigger at 30,000 USDT, market sell

If BTC rises to 50,000 USDT, the TP order triggers and places a limit sell at 50,500 USDT. The SL is canceled. If the price drops to 30,000 USDT, the SL triggers and the asset is sold at market price. The TP is canceled.

Practical Scenarios: When Profit Is Possible

Market Order TP/SL for Selling

Scenario: BTC is at 20,000 USDT, and you want to sell if the price drops to 19,000 USDT.

Parameters: trigger at 19,000 USDT, market sell

Result: As soon as the price touches 19,000 USDT, the system immediately places a market order to sell, and assets are sold at the best available price.

Limit Order TP/SL for Buying

Scenario: BTC is at 20,000 USDT, expecting it to rise to 21,000 USDT, and want to buy at 20,000 USDT.

Parameters: trigger at 21,000 USDT, limit at 20,000 USDT

Result: When the price reaches 21,000 USDT, the system places a limit buy order at 20,000 USDT. If the price drops to 20,000 USDT, the order executes.

Limit Order TP/SL for Selling

Scenario: BTC reaches 21,000 USDT, and you want to sell with profit.

Parameters: trigger at 21,000 USDT, limit at 21,000 USDT

Result: When triggered, the system places a limit sell order. If the best offer is higher than 21,000 USDT (e.g., 21,050 USDT), the order executes immediately at the better price. If the price falls below 21,000 USDT, the order remains in the order book.

Important Limitations and Features

When setting TP/SL for a limit buy order, the trigger price for TP should be higher than the limit price, and SL lower. For selling, the opposite applies.

There are also restrictions on price distance. For example, if the limit is 3%, the TP/SL price cannot deviate more than that percentage from the trigger.

If after executing the main order, the remaining assets do not meet the platform’s minimum requirements, your TP/SL may not be placed. Also, note that order size limits for spot market and limit orders may differ.

Conclusion: Profit Is the Result of Strategy

In conclusion, profit is not just luck; it’s the result of discipline and the right tools. Take-profit allows you to lock in successful trades, stop-loss protects against catastrophic losses. Understanding how TP/SL, OCO, and conditional orders work gives traders full control over their portfolio in any market scenario.