TP/SL means take profit and stop loss: two exit instructions associated with a trading position. The take-profit side aims to realize a gain at a favorable condition, while the stop-loss side aims to reduce exposure at an adverse condition.
Planning two possible exits
For a simple long position, the initial profit target is usually above entry and the loss threshold below it; the relationship reverses for a short. Each instruction may cover the entire position or a specified portion, depending on the platform.
The trigger reference, execution order type and quantity are separate settings. A triggered market order can experience slippage; a triggered limit order may never fill. Neither side guarantees the intended net result after costs.
How the instructions interact
Some systems link the instructions so that one cancels the other. Cancellation may occur when an instruction triggers or when it executes, depending on the design. A triggered but unfilled limit order can therefore leave different protection than a trader expects.
Adding to or partially closing a position can change the quantity needing protection. Confirm whether quantities adjust automatically and whether linked instructions remain active. TP/SL rules also do not override a platform’s liquidation conditions.