Stop loss and take profit

What stop loss and take profit are

A stop loss is a price set in advance at which the exchange closes your position at a loss. It is your decision "if price gets here, I was wrong" — made beforehand with a cool head, not while the chart is flying against you.

A take profit is the price at which the exchange closes the position in profit. It protects against the opposite mistake: the trade was well in profit, you held for "a bit more" and gave it all back.

Both orders trigger automatically — even if you are asleep, offline or not watching the chart.

Where to place them in longs and shorts

• Long (betting on a rise): stop loss below entry, take profit above.
• Short (betting on a fall): stop loss above entry, take profit below.

If long and short are still confusing, see Long, short and leverage with examples.

How to choose the stop level

The main rule: put the stop where your trade idea stops working, not where "the loss feels acceptable". You control the amount at risk with position size, not with the stop.

1. Beyond a level. For a long — just below the last swing low or support, for a short — just above the high or resistance. If price breaks the level, the scenario is broken.
2. By volatility. A stop inside a coin's normal noise gets hit by a random candle. ATR is a handy way to measure the distance — see the ATR stop loss guide.
3. With room before liquidation. On futures the stop must trigger before liquidation, otherwise the exchange takes the whole margin. The liquidation calculator shows that price.

Once the stop is chosen, size follows from it: position size = risk amount ÷ distance to stop. Then any stop costs exactly the planned amount — the position size calculator does this for you.

Risk/reward: 1:1, 1:2 or 1:3

The ratio shows how many times the potential profit exceeds the risk. The higher it is, the less often you need to be right to stay profitable:

• 1:1 — you need to win more than 50% of trades;
• 1:2 — more than 33%;
• 1:3 — more than 25%.

But a distant target is hit less often. A "1:5 with a 10% win rate" strategy is worse than "1:1 with 60%" — the ratio can't be chosen apart from how often price actually reaches it. So targets go at the next strong level, and the ratio is checked on historical data.

A common practical setup is two targets: close half at 1:1 and move the stop to breakeven, run the other half to 1:2 or further.

How to set stop loss and take profit on Bybit

1. When opening a trade. Tick TP/SL in the order form and enter the take profit and stop loss prices. They are placed together with the position.
2. For an open position. In the Positions tab press TP/SL next to the position and enter prices — for the whole position or part of it.
3. Trigger price. You can trigger by last price or mark price. Last price follows the chart more closely; mark price gives fewer false triggers on sharp wicks.

Binance, BingX and OKX work the same way: a TP/SL block in the order form and a TP/SL button on an open position.

Common mistakes

1. Trading without a stop. One trade without a stop can erase dozens of winners.
2. Moving the stop further away as price approaches it. That is hope, not risk management. Only move a stop in the direction of profit.
3. Setting the stop "by amount". "I'll put minus $5" places the stop inside the noise. Stop level first, size second.
4. Stop exactly on a round number. Crowd stops cluster at round prices and obvious lows — leave a small buffer beyond the level.
5. A target price almost never reaches. A pretty 1:5 on paper often means a string of stops in practice.

FAQ