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What is a stop loss and a take profit?

The two orders that decide whether a single trade stays survivable, and why your stop loss is the one you cannot trade without.

The short answer

A stop loss is an order that closes a trade automatically once it reaches a loss you chose in advance, so a bad move cannot keep draining your balance. A take profit does the mirror image: it closes the trade once it reaches a gain you set. Use a stop loss on every trade. A take profit is optional. A stop loss is not.

On UZO you trade real, live prices with simulated capital, and your account is governed by clear, published drawdown limits. The stop loss is the single tool that keeps one trade from threatening those limits. Learn it first.


How a stop loss works

When you open a trade you also place a stop loss at a price below your entry (for a buy) or above it (for a sell). If the market reaches that price, the platform closes the position for you, locking the loss at the amount you accepted when you entered. You do not have to be watching the screen, and you do not have to make the decision under pressure.

The point of a stop loss is not to be right. It is to make sure that when you are wrong, you are wrong by a small, known amount. Without one, a single trade can run against you until it eats a large part of your account, which is exactly how a single trade reaches a drawdown limit. With one, your worst case is decided before you ever enter.

You can set a stop on MetaTrader 5 and TradeLocker. Place it at entry, not after the trade is already losing, because the calm decision is always the better one.


How a take profit works

A take profit is an order that closes your trade automatically once it reaches a target gain. It does the opposite job of a stop loss: it banks a win without you having to time the exit by hand or talk yourself into holding for more.

A take profit helps with discipline, because it removes greed from the exit. It is optional, though. Some traders prefer to manage winners manually or trail the exit as price moves. That is a valid choice. Skipping a stop loss is never a valid choice.


Setting a stop using risk, not hope

Beginners often place a stop at a round number or wherever feels safe. That is hope, not risk management. Do it the other way round: decide how much money you are willing to lose on the trade first, then let that set your position size and stop placement.

Three things together set the real money at risk on any trade:

  • Stop distance: how far the stop sits from your entry, measured in pips or points.

  • Position size: how many lots or units you trade.

  • Pip value: how much one pip is worth, which depends on the instrument and your size.

Put plainly: a wider stop or a bigger position both mean more money at risk. Should you want a wider stop to give the trade room, trade a smaller size to keep the loss the same. This is the habit that keeps a trader in the game for the long run.


Stops and your drawdown limit

Every UZO product is governed by generous, clearly published drawdown limits, and reaching one closes the account. Drawdowns are measured on your account equity, which includes the profit or loss on any open positions, and the daily limit resets at 00:00 UTC. Instant uses a 3% daily drawdown and a 5% trailing maximum drawdown, and Instant Pro a 4% daily with a 6% trailing maximum, both with a single-trade loss cap. Instant 24h works to a 2% daily and 3% trailing limit. Two Step uses an 8% absolute maximum drawdown. Your live limits are always shown on your dashboard.

Your stop loss is what keeps a single trade well inside those limits. The discipline is simple: size every trade so that if the stop is hit, the loss is only a fraction of your daily room, never the whole of it. That way one losing trade is a scratch, not a breach, and you are free to take the next setup.

The habit that funds your reward

The profit split is 90/10, the same on every product and at every account size: you keep 90% of what you earn, one of the strongest shares available anywhere. You reach that reward by trading within your limits, and the stop loss is the single tool that keeps each loss capped. Protect the downside, and the upside takes care of itself.

One more note: a stop also protects you against the single-trade loss rules on the Instant products. Trade without one and a fast move can breach that rule before you react. The stop enforces the limit for you.


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