How to Use Take Profit and Stop-Loss for Risk Management in Spot Trading

2026-02-21 21:11:50

On the volatile crypto market, every trader faces one main challenge: how to lock in profits while protecting themselves from significant losses. Here, take profit comes to the rescue — an order that automatically sells your assets at your chosen price when the market moves in your favor. Along with a stop-loss order, these tools form a powerful capital management mechanism.

Why take profit and stop-loss are key risk management tools

Imagine: you bought Bitcoin at 40,000 USDT, but who can guarantee you’ll be online exactly when the price hits your target level of 50,000 USDT? Or that you’ll react in time to a drop? This is where automatic management via take profit and stop-loss proves its value.

Take profit (TP) allows you to set a exit price for a profitable position in advance. When the asset’s price reaches this level, the order automatically triggers and locks in your gains. Stop-loss (SL) works on the opposite principle — it protects you by selling the position if the price falls below a certain threshold, thereby limiting losses.

How take profit differs from stop-loss, OCO, and conditional orders

Many traders confuse these four types of orders, although each operates differently. The main difference lies in how the platform handles your assets at the moment of order placement.

Order Type	Asset Usage
TP/SL order	Assets are reserved immediately upon order placement, ready to execute when triggered
OCO order (One-Cancels-the-Other)	Only one side of the collateral is used — either for buying or selling, saving margin
Conditional order	Assets remain in the wallet until the underlying asset’s price reaches the trigger price; then they are reserved and await execution

For a detailed understanding of OCO orders, we recommend reviewing отдельным руководством.

How take profit and stop-loss work on the spot market

Direct placement of TP/SL: quick method

The simplest way is to set a take profit or stop-loss directly from the order section in the web version or mobile app.

When creating a TP/SL order, you need to specify three parameters:

Trigger price — the level at which the order activates
Order price — for limit orders, this is the desired execution price; for market orders, this parameter is not required
Volume — the amount of assets to buy or sell

Important: assets are reserved at the moment of order placement, not when the trigger is hit. This means you cannot use these funds for other trades until the order is executed or canceled.

What happens when TP/SL triggers

When the last trade price reaches the set trigger level:

Market order TP/SL — triggers instantly. Your assets are sold at the best available market price. All market orders follow the IOC (Immediate-or-Cancel) rule: any portion that cannot be filled due to insufficient liquidity is automatically canceled.

Limit order TP/SL — enters the order book and waits for execution at your target price. If at trigger time the best bid or ask is above (for sells) or below (for buys) your limit, the order will be filled immediately at a more favorable price. If not, it remains in the queue.

Important warning: limit TP orders often do not trigger because execution depends on price movement and current liquidity. The market may bounce in the opposite direction without reaching your limit price.

Practical trigger scenarios

Scenario 1: Protecting against a fall with a market stop-loss

BTC is trading at 20,000 USDT. You set a market stop-loss with a trigger at 19,000 USDT. If the price drops to this level, the order triggers immediately, and your Bitcoin is sold at the best available price (which may be slightly lower due to volatility).

Scenario 2: Locking in profit with a limit take profit

You bought BTC at 20,000 USDT and want to lock in profit if it rises to 21,000 USDT. You set a limit take profit with a trigger at 21,000 USDT and an order price of 20,000 USDT. When the price hits 21,000, the order activates. If the best ask at that moment is 21,050 USDT, the order will be filled at that price (above your limit — advantageous). If the best offer is below 20,000 USDT, it will stay in the queue.

Scenario 3: Counter-position with a limit take profit

BTC price is 20,000 USDT. You expect it to rise and set a limit buy with a trigger at 21,000 USDT and an order price of 20,000 USDT. When the price reaches 21,000, the order activates — you buy at the limit of 20,000 USDT. If the best ask is lower (e.g., 19,500 USDT), you buy at a favorable rate.

Pre-setup: take profit + stop-loss with a limit order

A more advanced method is to place a limit order and attach pre-prepared TP and SL orders to it. This works as an OCO strategy, where only one side of the collateral is reserved.

How it works:

You place a limit buy order, e.g., at 40,000 USDT
Simultaneously, you set up two pre-prepared orders:
- Take profit to lock in gains (trigger at 50,000 USDT)
- Stop-loss for protection (trigger at 30,000 USDT)
If the limit buy executes, the TP and SL automatically become active. They wait for their triggers, but only one can trigger — when one does, the other cancels.

Real example:

A trader plans to buy 1 BTC at 40,000 USDT. Simultaneously, they prepare:

Limit take profit: trigger at 50,000 USDT, order price 50,500 USDT
Market stop-loss: trigger at 30,000 USDT

If the price rises to 40,000 USDT — the buy order executes, and both TP/SL become active.

If later the price reaches 50,000 USDT — the take profit triggers, and a sell order for 1 BTC at 50,500 USDT is placed in the queue. The stop-loss is canceled.
If the price drops to 30,000 USDT — the stop-loss triggers, and your 1 BTC is sold at the best available price. The take profit is canceled.

Critical limitations and what you need to know

Rules for placing TP/SL with limit orders

When attaching take profit and stop-loss to a limit buy order:

The trigger for take profit must be above the buy price (logical — expecting growth)
The trigger for stop-loss must be below the buy price (protection against fall)

For sell orders:

The take profit trigger must be below the sell price (anticipating decline)
The stop-loss trigger must be above the sell price (protection against unexpected rise)

Price limits for trading pairs

The platform sets a maximum deviation of the order price from the trigger price. For example, for BTC/USDT:

When buying at trigger 21,000 USDT, the order price cannot exceed 103% (21,630 USDT)
When selling, the price cannot be lower than 97% of the trigger

Check exact limits in Правилах спотовой торговли.

When an order may not trigger

Insufficient size — if after executing the first order the total amount does not meet the minimum, TP/SL will not be placed
Market order limits — market TP/SL orders have a smaller maximum size than limit orders. If you set a market TP/SL for 1 BTC but the maximum available is 0.5 BTC, placement will be rejected
Price bounce — limit TP/SL are especially vulnerable to sharp reversals. The price may quickly bounce below your limit, and the order remains unfilled

Why limit TPs often disappoint

Limit take profits require patience and attentiveness. They do not execute until the market offers your target price. If a sharp jump occurs, bypassing your limit, the order may never fill. That’s why experienced traders use limit TP/SL for long-term positions and market orders for quick exits at critical levels.

In conclusion: take profit and stop-loss are not a panacea but tools that require understanding of the market and proper setup. Use them wisely, and they will help automate profit management and loss protection even in the most turbulent conditions.

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