Stop Loss and Take Profit are tools designed to help you manage risk and automate the sale of your investments. Whether you want to limit potential losses or secure profits, these orders allow you to define in advance how to act when the market reaches specific price levels.
What is a Stop Loss? A Stop Loss is an automatic sell order that helps you limit losses on an investment. By setting a trigger price, the order will execute automatically when the market reaches that level. Its goal is to help you manage risk without the need to constantly monitor market movements.
What is a Take Profit? A Take Profit is an automatic sell order that allows you to lock in profits from an investment. By setting a target price, the position will be sold automatically when the market reaches that level. This enables you to consolidate your gains without having to continuously monitor the market.
What is the difference between a fixed and a trailing order? 🔄
You can set both Stop Loss and Take Profit orders in two formats:
Fixed order: Maintains the same trigger price until you modify or cancel it. It is a good option when you have a clear idea of the price at which you want to sell.
Trailing order: Automatically adjusts the trigger price as the market moves in your favour. This allows you to protect profits or limit losses while enabling the investment to keep growing.
Stop Loss 🔻
What is the difference between a fixed Stop Loss and a trailing Stop Loss?
Fixed Stop Loss
A fixed Stop Loss order always maintains the same trigger price.
Example: Imagine you buy 8 HeyTrade shares at €50 per share. You are willing to accept a maximum loss of €10 per share, so you set a fixed Stop Loss order to sell at €40. If the price drops to €40, the order will execute automatically.
Trailing Stop Loss
A trailing Stop Loss order automatically adjusts the trigger price upwards as the market rises, always maintaining the trailing distance you have set. If the market falls, the trigger price does not decrease.
Example: Imagine you buy 8 HeyTrade shares at €50 per share. You want to protect yourself against significant losses without missing out on potential gains. Instead of setting a fixed Stop Loss order at €40, you opt for a trailing Stop Loss order with a trailing distance of €10.
If the price rises to €70, the trigger price will automatically adjust to €60. If the market subsequently drops to that level, the order will execute automatically.
Frequently Asked Questions about Stop Loss ❓
Can I modify or cancel a Stop Loss order?
Yes, you can modify or cancel the order at any time before it is executed.
Can I set multiple Stop Loss orders for the same position?
Yes, you can create multiple Stop Loss orders for the same position according to your investment strategy.
Can I use Stop Loss and Take Profit at the same time?
Yes, you can set both orders on the same position to manage both potential losses and gains.
Will I receive a notification when the order is executed?
Yes, you will receive a notification as soon as the order executes.
Is there any cost to using Stop Loss?
No, there are no additional fees for using this feature. Only standard trading commissions apply.
Where can I check my order history?
You can check all executed orders in the Transactions section.
Take Profit 🟢
What is the difference between a fixed Take Profit and a trailing Take Profit?
Fixed Take Profit
A fixed Take Profit order always maintains the same trigger price.
Example: Imagine you buy 8 HeyTrade shares at €50 per share. You consider that making a profit of €25 per share is a realistic goal, so you set a fixed Take Profit order to sell at €75. When the price reaches that level, the order will execute automatically.
Trailing Take Profit
A trailing Take Profit order allows the position to continue benefiting from market rises. Once the trigger price is reached, it will automatically adjust higher as long as the price continues to rise. If the market retraces by the set trailing distance, the order will execute.
Example: Imagine you buy 8 HeyTrade shares at €50 per share. You want to secure potential profits and exit the trade at the right time. Instead of setting a fixed Take Profit order at a specific price, you choose a trailing Take Profit order with a trailing distance of €10 and a trigger price of €70.
When the price reaches €70, the trailing Take Profit will start following the market. If the price keeps rising, the trigger price will also increase automatically. If the price subsequently falls back by €10, the order will execute, securing the profits gained.
Frequently Asked Questions about Take Profit ❓
Can I modify or cancel a Take Profit order?
Yes, you can modify or cancel it at any time before it is executed.
Can I set multiple Take Profit orders?
Yes, you can create multiple Take Profit orders for the same position.
Will I receive a notification when the order is executed?
Yes, you will receive a notification as soon as the order executes.
Is there any cost to using Take Profit?
No, there are no additional fees. Only standard trading commissions apply.
Where can I check my order history?
You can check all executed orders in the Transactions section.
We hope you found this information useful. If you have any questions, please reach out via our in-app chat or email us at support@heytrade.com. We will be delighted to help! 😊