Deposit Management
Part 5: Loss and Profit Limits — Protecting Your Deposit
No strategy will guarantee success 100% of the time. To protect your deposit from significant losses, it is important to set limits on losses and profits.
What are limits?
Limits are levels at which a trade is automatically closed:
• Stop Loss: Limits losses.
• Take Profit: Locks in profits.
How to properly set limits?
1. Stop Loss:
Calculate the level at which the loss will be 2%. For example, if you buy an asset for $50, your stop loss should be set at $40 (for 2 assets).
2. Take Profit:
Set a risk-to-reward ratio, for example, 1:2.
Advantages of limits
1. Emotion Control: Decisions are made in advance, not in a stressful situation.
2. Deposit Protection: Limits minimize losses and lock in profits.
3. Automation: The exchange automatically closes trades when your levels are reached.
Tip for [Binance](https://www.binance.info/activity/referral-entry/CPA?ref=CPA_00GBXCXTIR) traders
Try dynamic stop losses (trailing stop) to lock in profits as the price moves in your favor.
