CoinTN
Take profit and stop loss are the most important risk control methods in trading, but many people don't know exactly how to operate them on Binance. Some people just wait after opening a position, ending up liquidated without setting a stop loss, or having their profits wiped out without setting a take profit. Setting take profit and stop loss on the official Binance website is actually not complicated, and learning it can save you a lot of money. Operating via the official Binance APP is more convenient, allowing you to adjust anytime, anywhere. Apple users should first read the iOS installation guide to install the app.
What is Take Profit and Stop Loss
Take Profit (TP) means setting a price, and when the market price reaches this level, the position is automatically closed to lock in profits. For example, if you buy BTC at 60,000 and set a TP at 65,000, it will be automatically sold when the price reaches 65,000, securing your profits.
Stop Loss (SL) means setting a price, and when the market price drops to this level, the position is automatically closed to reduce losses. For example, if you buy BTC at 60,000 and set an SL at 58,000, it will be automatically sold when the price drops to 58,000, keeping your losses within a certain range.
The core philosophy of take profit and stop loss is: let profits run, cut losses short. With TP/SL properly set, you don't need to monitor the market 24/7, making your trading more relaxed.
How to Set Take Profit and Stop Loss on Binance Futures
Method 1: Set Simultaneously When Opening a Position
When placing an order on the Binance futures trading page, there is a "TP/SL" option in the order confirmation area. By checking it, you can set it at the same time as opening your position.
Specific operation steps: Enter the futures trading page, select the trading pair, set the leverage and position size. Find and check the "TP/SL" toggle in the order placement area. Set the take profit price and stop loss price. After confirming the order, the TP/SL will take effect along with the opening of the position.
The advantage of this method is getting it done in one step without forgetting to set a stop loss. It is recommended to develop the habit of setting TP/SL simultaneously every time you open a position.
Method 2: Set in the Positions List
If you forgot to set TP/SL when opening the position, you can also add it while holding the position. In the "Positions" list at the bottom of the futures trading page, find your position and click the "TP/SL" button on the right side.
In the pop-up settings window, you can separately set the take profit price and stop loss price. You can choose to trigger by "Mark Price" or "Last Price". It is recommended to choose "Mark Price" because it is more stable and less likely to be triggered by brief price fluctuations.
Method 3: Use Stop Limit Orders
In addition to the above methods, you can also manually place a stop limit order or stop market order. Select "Stop Limit" or "Stop Market" in the order type.
A stop limit order requires setting two prices: trigger price and limit price. When the market price reaches the trigger price, the system will automatically place a limit order at the specified limit price. The advantage is precise control over the execution price, but the disadvantage is that it may not be filled in extreme market conditions.
A stop market order only requires setting a trigger price. When the market reaches the trigger price, it will be executed directly at the market price. The advantage is guaranteed execution, but the disadvantage is potential slippage.
For stop loss, it is recommended to use stop market orders to ensure you definitely exit. For take profit, you can use stop limit orders for better price control.
How to Set Take Profit and Stop Loss on Binance Spot
Spot trading can also utilize take profit and stop loss. On the spot trading page, select "Stop-Limit" in the order types.
To set a take profit: Select the "Sell" direction, set the trigger price (your desired condition for selling) and the sell price (actual order price), enter the amount, and confirm.
To set a stop loss: Similarly select the "Sell" direction, set a trigger price and sell price lower than the current price.
The logic of spot TP/SL is the same as futures, except that spot only allows one-way operations (you must hold the coin to set a sell stop loss).
Additionally, Binance spot has an "OCO" (One Cancels the Other) order, which allows you to set both take profit and stop loss simultaneously; whichever triggers first gets executed, and the other is automatically canceled. This is a very practical feature.
Where Should Take Profit and Stop Loss Be Set?
Stop Loss Setting Principles
Technical analysis practitioners usually place stop losses just outside key support or resistance levels. For instance, if you are going long, set the stop loss slightly below the nearest support level. If the support level is broken, it means your directional judgment might be wrong, and you should exit.
The percentage stop loss method involves setting a fixed percentage of loss. For example, risk a maximum of 2% of total capital per trade. Calculate the stop loss price backwards based on the leverage multiplier and position size.
The volatility stop loss method is set according to the asset's fluctuation range. For example, using 1.5 to 2 times the ATR (Average True Range) indicator as the stop loss distance ensures it won't be too close to get knocked out by normal fluctuations.
Take Profit Setting Principles
Risk-reward ratio principle: The take profit distance should be at least twice the stop loss distance. For example, if your stop loss is set 2% below the entry price, your take profit should be set at least 4% above. This way, even if only half of your trades are profitable, you still make money overall.
Key price level take profit: Set take profits near previous highs, round numbers, Fibonacci retracement levels, and other key price points.
Scaling out: Don't close your entire position at one price level; you can take profits in batches at different price levels. For instance, close half at the first target level, then move the stop loss for the remaining position to the breakeven point, and let it run to higher target levels.
Advanced TP/SL Strategies
Trailing Stop
A trailing stop is a dynamic stop loss method. As the price moves favorably, the stop loss follows along, but it stays put when the price retraces. This protects profits while letting the winning trades run.
In Binance futures, you can use the "Trailing Stop" feature. Set a callback rate, such as 5%. When BTC rises 10% from your entry price and then starts to fall back, it will automatically close the position once it drops 5%. If the price continues to rise to 15% and then drops 5%, the stop loss moves up with it.
Operation method: Select "Trailing Stop" in the order types, set the callback rate and activation price, then confirm the order.
Scaling In and Out
Don't put all your eggs in one basket, and the same applies to TP/SL. You can split your position into several parts and set take profits at different price levels.
For instance, if you open a long position of 1 BTC: set a take profit for 0.3 BTC at 3% above the entry price; set another take profit for 0.3 BTC at 6% above; and protect the remaining 0.4 BTC with a trailing stop to let it run as far as possible.
Conditional Trigger Stop Loss
Sometimes your stop loss doesn't just rely on price, but also other conditions. For instance, if BTC breaks below a certain level accompanied by an enlarged trading volume, the probability of a continued decline is higher. Although Binance's basic features do not support multi-condition stop losses, you can implement more complex stop loss logic via API interfaces.
Common TP/SL Mistakes
The first mistake is setting the stop loss too close. Normal market fluctuations will knock you out, and then the price returns to your expected direction. A stop loss must give the price enough breathing room.
The second mistake is constantly modifying the stop loss manually. Moving the stop loss further away as it approaches after opening a position equates to having no stop loss at all. Once set, do not easily change your stop loss (unless moving it in a favorable direction).
The third mistake is only setting a stop loss without a take profit. Many people learn to set a stop loss but forget the take profit, resulting in profitable trades turning back into losses. Take profit is equally important.
The fourth mistake is using exact round numbers. For example, setting a stop loss exactly at 60,000; many people will place theirs here, making it prone to targeted stop loss hunting. It is advisable to offset it slightly, such as setting it at 59,850.
Frequently Asked Questions
Can take profit and stop loss be set simultaneously?
Yes. In the Binance futures positions interface, after clicking the TP/SL button, you can set both the take profit price and stop loss price simultaneously. The two conditions do not affect each other; whichever triggers first will be executed.
Is it better to use Mark Price or Last Price for TP/SL?
It is recommended to use Mark Price for triggering. The Mark Price is calculated based on a weighted average of spot prices from multiple exchanges, making it more stable and reliable. The Last Price might be abnormally triggered due to short-term price fluctuations or manipulation.
Why are the actual losses more than expected after the stop loss is triggered?
This may be caused by slippage. If you use a stop market order, the actual execution price might be worse than the trigger price during violent market fluctuations. Additionally, if there is a price gap (jumping directly over your stop price), the actual execution price will also deviate.
Will a position be automatically reopened after a stop loss is triggered?
No. After a TP/SL triggers and closes the position, your position is gone and will not automatically reopen. If you want to re-enter, you need to operate manually or use more advanced trading strategies.
Does Binance have a trailing stop feature?
Yes. Select "Trailing Stop" in the futures trading order types, and set the callback rate and activation price. The trailing stop will automatically move up as the price rises, helping you protect increasing profits during a trend.