Home / Academy / Stop loss and take profit
See exactly how exits work. Annotated charts for BUY and SELL, a risk-to-reward calculator, and clear explanations of TP1, TP2, TP3, breakeven and trailing stops.
Risk warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Educational content only. Nothing here is a recommendation, and no result is guaranteed.
A stop loss (SL) is an instruction to close a trade automatically if price reaches a level you chose in advance. It limits how much one trade can cost you. You decide the exit while you are calm and thinking clearly, not in the middle of a fast market.
Think of it as the price where your idea is shown to be wrong. If you buy gold because you expect a rise, and price falls below a level that breaks that idea, the stop closes the trade and you move on.
A stop loss is not a guarantee: in a very fast market, price can jump past it (slippage) and the order fills at the next available price. That is why tight lot sizes matter too.
A take profit (TP) is an instruction to close a trade automatically at a profit level you chose in advance. It stops you from watching a winning trade turn into a loser because you hoped for a bit more. Choosing a TP is also a way of deciding, before you enter, whether the trade is worth taking at all: if there is not enough room to a sensible target compared with the risk, skip it.
For a BUY, the stop loss is below the entry and the take profit is above it. For a SELL, it is the reverse: stop loss above, take profit below. MetaTrader will reject an order with levels on the wrong side (the mobile apps show an "Invalid S/L or T/P" warning).
When opening a trade, type the stop loss price in the Stop Loss field of the order window. In MetaTrader 5's documentation the field can accept a price (or a distance in points depending on platform settings). After the trade is open you can change it: on desktop, right-click the position on the Trade tab and choose Modify or delete, enter the new levels and click Modify. On mobile, tap the current value to type a new level, or drag the level on the chart.
Same process: type the Take Profit price in the order window, or modify it later. MT5 accepts a stop loss or take profit of zero to mean "none attached", which is why leaving a field at 0 means that trade has no protection. Always check the Trade tab shows both levels after you open a position.
Signals often give three take-profit levels. TP1 is the nearest, TP2 further and TP3 the most ambitious. Each additional level is less likely to be reached, because price has to travel further. The three-target style tries to balance two truths: banking some profit early feels safer, but letting part of the trade run can capture a bigger move.
In MetaTrader 5, one position has one take profit. There are two common ways to use three targets:
| Separate positions | Partial close | |
|---|---|---|
| How | Open 3 smaller trades, each with its own take profit and the same stop loss. | Open one trade with a take profit at the last target. At TP1, close part of it by hand. |
| Account type | Needs a hedging account (several positions per symbol). | Works on netting and hedging accounts. |
| Pros | Each target executes automatically. | Simple, one position to watch. |
| Cons | More positions, more spread cost, smaller lots may hit broker minimums. | You must be present at TP1, or the partial close does not happen. |
The official documentation describes closing part of a position by choosing Close Position, entering a smaller volume and confirming. Source: MetaTrader 5 Help.
The risk-to-reward ratio compares how much a plan risks with how much it aims to make, measured in price distance. Risking 10 points to aim for 20 is a ratio of 1 : 2. The ratio matters because it tells you how often you need to be right. If every trade risks 1 and aims for 2, a trader who wins one trade in three roughly breaks even before costs. If every trade aims for only 0.5, the trader needs to win two in three just to break even.
Two warnings. First, a high ratio does not mean a good trade: a far target is less likely to be hit. Second, a ratio is price distance, not money. The money depends on the lot size, and costs such as spread change the real numbers.
Some traders move the stop loss up to the entry price once the first target is hit, so the rest of the trade can no longer lose money (apart from costs). The upside is protection. The downside is that normal pullbacks can knock you out of a trade that then goes on to reach your target.
A trailing stop follows price as it moves your way, keeping a set distance behind it, but it never moves backwards. If price then reverses by that distance, the stop is hit and the profit made so far is kept. MetaTrader 5 has a built-in trailing stop for open positions. On desktop it is set from the position's context menu on the Trade tab, and it only works while the terminal is running and connected.
Trailing stops suit trending markets and perform poorly in choppy ones, where price keeps tagging the stop and then continuing. A tight trail exits early; a loose one gives back more profit.
When price touches your stop, the platform closes the position at the next available price. For a BUY, the stop is triggered by the bid price (the price you would sell at), so the spread can make a stop hit slightly earlier than the chart suggests. The loss is realised, the position leaves the Trade tab and appears in History. If the market is moving quickly, or the stop sits near the weekend close or a news release, the fill can be worse than the stop price. That difference is slippage. A stop loss is not a guaranteed price.
Gold can jump. At the weekend open, or after a surprise announcement, price can move from one level to another without trading in between. A stop placed in that gap fills at the first available price beyond it. This is why traders size positions with the possibility of worse-than-planned losses in mind, and why some avoid holding trades over the weekend or through major news.
Use the live TradingView chart to look at how far real gold price moves on different timeframes. A stop that is 10 points away on a quiet 5-minute chart may be hit by ordinary movement in minutes during a busy session.
A stop loss is a preset order that closes a trade at a chosen loss level, limiting how much one trade can lose.
That depends on the strategy and market conditions. Many traders place it beyond a level that would show their idea is wrong, then size the position from that distance. It should allow for gold's normal volatility and the spread. This is not personal advice.
They are successive take-profit targets, from nearest to furthest. MT5 positions hold one take profit each, so multiple targets need separate positions or partial closes.
There is no universal good number. A higher ratio needs fewer winning trades to break even, but far targets are reached less often. Test any plan on a demo account first.
No. In fast markets or price gaps, a stop can fill at a worse price than the level you set.
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