What exactly are stop losses and take profits used for in forex trading?

Answer 1

In forex trading, stop losses (SL) and take profits (TP) are like your safety nets.

Stop Loss (SL): It's your "get out of jail free card". You set a level where you want to cut your losses if the market moves against you. If the price hits that level, your position closes automatically to limit further losses. You’re saying, “I’m out if it hits this price.”

Take Profit (TP): This is your “cash out” point. You set it at the price you want to take your profits once the market moves in your favor. When the price hits that level, boom — your position closes, and you lock in the gains.

Both are key to managing risk and keeping emotions in check.