eToro Take Profit and Stop Loss - Learn How to Set Corectly

What is eToro Take Profit (TP)? 

Take Profit (TP) is an instruction or limit order that determines the exact price at which an open position should be closed for a profit. To simply put it, Take Profit orders are set on eToro to automatically close an open position for a profit when it reaches a specified amount. 

You can decide to specify a Take Profit after your trade has been opened and it is completely optional. This tool is mostly used by short-term traders on eToro for risk management. This is because they can automatically exit a trade as soon as their intended profit target is met and avoid running the risk of a potential market decline.

The eToro TP order will not get filled if the security does not reach the limit price. In a fast-paced market, your Take Profit order may not be traded in the market.  The Take Profit will be triggered at the next available rate in this situation. As a result, you can gain more than you anticipated from the trade. 

Generally, the essence of an eToro TP order is to help traders minimize risk. Please note that Take Profit orders are not accessible on US stocks on eToro. 

What Is eToro Stop Loss (SL)? 

Stop Loss (SL), much like TP, is an instruction to close a trade. The difference is that with TP, you are closing at a profit. However, SL closes a trade at a loss specified by the trader. Setting a Stop Loss order in eToro is intended to reduce the amount of loss you incur on a security position. 

As a trader, one of your most crucial responsibilities is to stay in the market by managing and protecting your trading capital. This is because if you lose all your trading capital, you are out of the market. Making it back will be impossible with nothing to trade with. 

Unavoidably, we will find ourselves in a losing position, but we have a choice over how to control the losses using eToro Stop Loss.

eToro Stop Loss order does not only help you cut losses, it also helps ease the anxiety brought on by being in a losing trade without a plan. Note that Stop Loss is required on every position except non-leveraged BUY positions on eToro. 

How to Use Take Profit and Stop Loss

Both Stop Loss and Take Profit orders are essentially instructions from the trader (you) to the broker (eToro) about when to close the trades to manage risks. Here's how to set your take profit and stop loss levels.

Setting Your Take Profit 

With Take Profit orders, there are numerous tactics you can use. The following is a list of some of the common strategies employed by experienced traders:

• Using the moving average to position them
• Knowing how to interpret Fibonacci trends' peaks and troughs
• Placing them at major support or resistance levels 
• Using signals based on price action to determine market sentiments

To set a Take Profit order on eToro, click on TAKE PROFIT. Then enter a rate or adjust the TP per pip with the + and - button. 

Alternatively, you can set the TP as a monetary amount by clicking the AMOUNT button. 

You can also adjust the Take Profit while the trade is open. To do so, 

• Open the Edit Trade Window by clicking on the relevant trade in your portfolio. Then click TAKE PROFIT.
• If you wish to add a TP rate, click on SET TP and adjust the Take Profit setting. 
• To save the changes, click Update. 

Setting Your Stop Loss

Your specified Stop Loss should be determined by your risk threshold. For instance, if your risk-to-reward ratio is 4:1, you might be prepared to stake 25% of your initial investment to reach your take profit. 

To set up your Stop Loss order on eToro, click STOP LOSS and enter a rate. You can also adjust the SL one pip at a time using the + and - button. 

You can place your SL order as a monetary value by clicking on AMOUNT. 

Please be aware that after the trade has been opened, you may increase your Stop Loss above the limit set when opening a trade. By doing this, money will be deducted from your available balance.

To set the STOP LOSS when a trade is open, open the Edit Trade Window by clicking on the relevant trade in your portfolio. Click on STOP LOSS, then select SET SL to adjust the setting. 

To save changes, click on UPDATE. 

Tips to Help You Make the Most of TP and SL

When it comes to setting SL, set stops following the framework, trading strategy, or current market conditions.

Also, decide when to leave a position before opening a trade. Even when you can change your Stop Loss once a trade has been opened, emotions can get in the way of making the best choice, which can be very detrimental to your capital.

In determining TP, you will lose if you try to guess the Take Profit levels. Only use technical and fundamental analysis as the foundation for your predictions. When examining a market, use caution and ensure you have a market analysis algorithm.

One other thing you need to consider when placing a trade on eToro is leverage.

Conclusion

In theory and to beginners, these market orders might still seem somewhat difficult to grasp. Following knowledgeable, experienced traders is the quickest way to become familiar with these market orders and execute them with confidence. 

To make this possible, eToro offers a copy trading feature that helps new traders navigate the financial markets more easily. 

Once you understand the principles behind Stop Loss and Take Profit orders, you can use your eToro account to place trades knowing exactly what your best and worst-case outcomes will be.

To learn more about the platform and its features, read our eToro review.

Disclaimer

eToro is a multi-asset platform which offers both investing in stocks and cryptoassets, as well as trading CFDs.

Please note that CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

Past performance is not an indication of future results. Trading history presented is less than 5 complete years and may not suffice as basis for investment decision.

Copy Trading does not amount to investment advice.  The value of your investments may go up or down.  Your capital is at risk.

Cryptoasset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.

Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment and you should not expect to be protected if something goes wrong. Take 2 mins to learn more

eToro USA LLC does not offer CFDs and makes no representation and assumes no liability as to the accuracy or completeness of the content of this publication, which has been prepared by our partner utilizing publicly available non-entity specific information about eToro.