Take-profit and stop-loss are the most important risk management tools in futures trading — proper settings can automatically lock in profits or limit losses even when you're away from the screen. Open a Binance futures account to learn using the TP/SL features, and the Binance APP supports setting take-profit and stop-loss parameters simultaneously when opening positions.
What Are Take-Profit and Stop-Loss?
Take-profit (TP) is a setting that automatically closes your position to lock in profits when the price reaches your target. Stop-loss (SL) is a setting that automatically closes your position to limit losses when the price moves adversely to a certain degree. Using both together protects your positions while you're away from the computer or sleeping. For example, if you go long on BTC at $65,000 and set TP at $70,000 (auto-close and take profit when price reaches $70,000) and SL at $63,000 (auto-close and cut losses when price drops to $63,000), your maximum loss and target profit are both predetermined regardless of which way the price moves.
How to Set TP/SL on Binance?
Binance futures offers two ways to set take-profit and stop-loss. The first is setting them simultaneously when opening a position: on the order interface, check the "TP/SL" option, enter the take-profit and stop-loss prices, and submit alongside the opening order. The second is setting them for existing positions: find your position in the positions list, tap the "TP/SL" button, set the target prices, and confirm. You can set multiple take-profit prices for partial closing — for example, closing 50% of the position at target price one and the remaining 50% at a higher target price two. Stop-loss can similarly be set in tiers, gradually raising the stop-loss price as profits increase (trailing stop).
How to Determine TP/SL Prices?
Determining take-profit and stop-loss prices requires combining technical analysis with risk management principles. From a technical analysis perspective, stop-loss is typically placed below key support (when long) or above resistance (when short), while take-profit is set at the next resistance (when long) or support (when short). From a risk management perspective, the stop-loss amount per trade should not exceed 1%-2% of total account value — then work backward to determine stop-loss distance and position size. The risk-reward ratio (take-profit distance divided by stop-loss distance) should be at least 2:1, meaning expected profit should be at least twice the risk. For example, with a 100 USDT stop-loss, take-profit should be at least 200 USDT. This way, even with only a 40% win rate, you can be profitable long-term.
Advanced Use of Trailing Stops
A trailing stop is a dynamic stop-loss that automatically adjusts as the price moves favorably. For example, if you go long on BTC and set a trailing stop with a 2% callback. When BTC rises from $65,000 to $70,000, the stop-loss automatically moves up to $68,600 (70,000 x 98%). If the price continues to $75,000, the stop moves to $73,500. When the price falls more than 2% from the peak, the position is closed. The benefit of trailing stops is maximizing trend capture without exiting too early. When setting the callback percentage, consider the coin's normal volatility — 2%-3% is usually appropriate for Bitcoin, while more volatile altcoins may need 5%-10%.
Common TP/SL Mistakes
Not setting a stop-loss is the most dangerous mistake — many beginners hold on thinking "it'll bounce back," only to watch losses grow until liquidation. Setting stops too tight is also problematic — normal price fluctuations sweep you out of the trade. Setting take-profit too far means it may never trigger, and you watch profits evaporate. Frequently modifying stop-losses, especially moving them further away as losses grow, reflects a lack of discipline. Ignoring risk-reward ratios — a 1:1 or worse ratio requires very high win rates to be profitable. The correct approach is to plan your TP/SL levels before opening a position, stick to them after placing the order, and strictly follow your trading plan.