1. What is Stop-Loss And Take Profit?

Stop-Loss (SL) and Take Profit (TP) are essential risk management tools in trading that help traders define their exit points. A stop-loss order limits potential losses, while a take-profit order secures profits at predetermined levels.

2. How Does the Calculator Work?

The calculator uses simple formulas:

Where:

• \( Entry \) — Entry price of the trade
• \( Risk \) — Amount you're willing to risk per unit
• \( Reward \) — Amount you expect to gain per unit

Explanation: These calculations help traders set precise exit points based on their risk tolerance and profit targets.

3. Importance of Risk Management

Details: Proper risk management through SL and TP orders is crucial for long-term trading success. It helps preserve capital, manage emotions, and maintain consistent trading discipline.

4. Using the Calculator

Tips: Enter your entry price, risk amount, and reward amount. All values must be positive numbers. The calculator will compute your stop-loss and take-profit levels.

5. Frequently Asked Questions (FAQ)

Q1: What is a good risk-reward ratio?
A: Most successful traders use a minimum 1:2 risk-reward ratio, meaning the potential reward is at least twice the risk.

Q2: Should I always use stop-loss orders?
A: Yes, stop-loss orders are essential for risk management and should be part of every trading strategy.

Q3: How do I determine my risk amount?
A: Risk should typically be 1-2% of your trading capital per trade to ensure proper capital preservation.

Q4: Can I adjust stop-loss after entering a trade?
A: Yes, you can trail your stop-loss to lock in profits as the trade moves in your favor (trailing stop).

Q5: What if the market gaps through my stop-loss?
A: In volatile conditions, your stop-loss may execute at a worse price than set (slippage). This is why position sizing is crucial.