Here are some steps to set up stop loss and take profit levels:
Determine your risk tolerance
Before you set up stop loss and take profit levels, you need to determine your risk tolerance. This will help you decide how much of your trading account you are willing to risk on a trade. A general rule of thumb is to risk no more than 2% of your trading account on a single trade.
Also see: How to determine one’s tolerance to risk?
Set your stop loss level
A stop loss is an order to sell a security when it reaches a certain price level. It is designed to limit your losses on a trade. To set your stop loss level, you need to identify a price level at which you are no longer comfortable holding the position. This could be based on technical analysis, such as a support or resistance level, or it could be based on a percentage of the security’s price.
Also see: Some ways of setting up stop loss levels
Set your take profit level
A take profit is an order to sell a security when it reaches a certain price level. It is designed to lock in profits on an ongoing trade. To set your take profit level, you need to identify a price level at which you want to take profits. This could be based on technical analysis, such as a resistance level, or it could be based on a percentage of the security’s price.
Also see: Some ways of setting up take profit levels
Place your orders
Once you have determined your stop loss and take profit levels, you need to place your orders with your broker. Make sure to double-check the order details before submitting them.
Monitor your trades
After placing your orders, you need to monitor your trades to see if they are executed. If your stop loss or take profit level is reached, the order will be executed automatically. However, if the price moves in your favor, you may want to adjust your take profit level to lock in more profits or move your stop loss level to limit your losses.