# Order Types

## Take Profit / Stop Loss Orders

**Take Profit (TP) orders** are used to automatically close a position and secure profits once the market price reaches a predefined level:

* For **Long positions**, the TP should be set **above the entry price**.
* For **Short positions**, the TP should be set **below the entry price**.

**Stop Loss (SL) orders** are used to automatically close a position and limit losses once the market price hits a predetermined level:

* For **Long positions**, the SL should be set **below the entry price** and **above the liquidation price**.
  * Below the entry price: to cut losses early.
  * Above the liquidation price: to reduce the risk of forced liquidation.
* For **Short positions**, the SL should be set **above the entry price** and **below the liquidation price**.
  * Above the entry price: to cut losses early.
  * Below the liquidation price: to reduce the risk of forced liquidation.

***

### How to set TP/SL effectively?

* **Long positions**
  * TP: place it at a level higher than the entry price to secure profit.
  * SL: place it lower than the entry price to limit losses, but make sure it is still above the liquidation price to avoid being liquidated.
* **Short positions**
  * TP: place it at a level lower than the entry price to secure profit.
  * SL: place it higher than the entry price to limit losses, but ensure it is still lower than the liquidation price to avoid liquidation.


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