How do Stop Loss and Take Profit orders function in a BUY trade?
Take Profit (TP): You place a SELL Limit at a higher price — to automatically close the trade when profit is reached.
Stop Loss (SL): You use a SELL Stop at a lower price — to automatically cut your loss if the price drops.
Example Scenario:
You BUY a contract at 4100.50.
To take profit at 4109.25 → place a SELL Limit at 4109.25.
To cut loss at 4098.25 → place a SELL Stop at 4098.25.
How do Stop Loss and Take Profit orders function in a SELL trade?
Take Profit (TP): You place a BUY Limit at a lower price — to close the trade when the market falls and reaches your profit target.
Stop Loss (SL): You use a BUY Stop at a higher price — to exit the trade if the market moves against you and rises too far.
Example Scenario:
You SELL a contract at 4100.
To take profit at 4098.25 → place a BUY Limit at 4098.25.
To cut loss at 4109.25 → place a BUY Stop at 4109.25.
Setting Stop Loss/Take Profit using ATM:
Another way to set up Stop Loss and Take Profit is through ATM (Advanced Trade Management). When opening a trade, you can predefine your Stop Loss and Take Profit levels so they’re automatically placed once the trade is executed. At this stage, you can choose standard order types like Limit (for Take Profit) and Stop (for Stop Loss), or opt for more advanced types such as Stop Limit.
Initially, you set a specific price ('x'), and the order is only allowed to execute at that price or better. If the market offers a worse price, the order will not be triggered. As a result, you may notice that your Stop Loss or Take Profit didn’t close your trade—even though the market appeared to reach your target level.
Are Stop Loss and Take Profit guaranteed?
One of the most common misunderstandings in Futures trading comes from how Stop Loss and Take Profit orders are triggered. These orders are not activated based on the last traded price, which is typically displayed on most charts. Instead, they rely on the BID or ASK price, depending on the direction of your trade:
For a BUY trade, Stop Loss (SELL Stop) or Take Profit (SELL Limit) → the BID price must reach the trigger level.
For a SELL trade, Stop Loss (BUY Stop) or Take Profit (BUY Limit) → the ASK price must reach the trigger level.
So, even if the chart shows that the price touched your level, your order may not execute unless the BID or ASK price met the condition.
Additionally, liquidity plays a key role. Even if the trigger price is reached:
Your order still needs a counterparty to fill it. For instance, if your Take Profit is a SELL Limit and no buyers are active at that level, the order will stay pending.
This issue becomes more common during low-liquidity periods or high-volatility moments, such as news releases or market openings.