MetaTrader 5 makes it relatively easy to open a trade, but opening a position is only one part of the trading process. Before entering the market, you should also know where the trade will be closed if the market moves against you and where you plan to take profits if the trade moves in your favor.
This is where Stop Loss and Take Profit on MT5 become essential.
A Stop Loss can help define your maximum planned loss, while a Take Profit allows you to set a predefined profit target. Used correctly, these tools can make trading more structured and reduce the need to make emotional decisions while a position is open.
In this guide, you will learn how Stop Loss and Take Profit work, how to set them on MT5, how to modify them, and how to combine them with position sizing and proper risk management. If you are still learning the basics of the platform, you may first want to read our guide on how to use MT5.
What Is a Stop Loss on MT5?
A Stop Loss is an order instruction designed to close an open position if the market reaches a specified price level.
Its main purpose is to limit the potential loss on a trade.
For example, imagine that EUR/USD is trading at:
1.1000
You open a Buy position because your analysis suggests that the price may move higher.
However, you also decide that your trading idea is no longer valid if the market falls below:
1.0950
You can place your Stop Loss around that level.
If the market reaches the Stop Loss level, MT5 will send an instruction to close the position according to the available market and execution conditions.
The important idea is simple:
A Stop Loss defines where you are prepared to accept that your trade idea was wrong.
What Is Take Profit on MT5?
A Take Profit order works in the opposite direction.
Instead of limiting a loss, it defines a price level where you want to close a profitable position.
For example:
- Entry price: 1.1000
- Take Profit: 1.1100
If the market reaches your Take Profit level, MT5 can close the position according to the order and market conditions.
A Take Profit helps traders avoid one common problem:
Holding a profitable trade without a clear exit plan.
Without a predefined target, traders may become greedy and continue holding a position even after the original trading objective has been reached.
Why Should You Use Stop Loss and Take Profit?
Stop Loss and Take Profit can help create a structured trading process.
Before entering a trade, you should ideally know:
- Where you will enter
- Where your trade idea becomes invalid
- How much money you are willing to risk
- Where you expect to take profits
This means that the basic trade structure can be planned before the position is opened.
Instead of entering a trade and deciding what to do afterward, you create rules in advance.
This is particularly important when markets become volatile.
How to Set Stop Loss and Take Profit When Opening a Trade on MT5
When opening a new order in MT5, the order window usually allows you to enter important trade parameters.
Depending on your order type, you can define:
- Symbol
- Volume
- Order type
- Entry price
- Stop Loss
- Take Profit
The basic process is generally:
Step 1: Select Your Trading Instrument
Choose the market you want to trade.
For example:
- EUR/USD
- GBP/USD
- USD/JPY
- Gold
- An index
The available instruments depend on your broker.
Step 2: Open the New Order Window
Open the order window from the chart, Market Watch, or the New Order button.
If you are unfamiliar with placing trades, read our guide to MT5 order types.
Step 3: Choose Your Position Size
Before setting your Stop Loss and Take Profit, determine how much you are willing to risk.
Do not choose a lot size randomly.
Your position size should depend on:
- Account balance
- Risk percentage
- Stop Loss distance
- Pip value
You can use our free Position Size Calculator to estimate an appropriate position size.
Step 4: Enter Your Stop Loss Price
For a Buy position, the Stop Loss is normally placed below the entry price.
For a Sell position, the Stop Loss is normally placed above the entry price.
However, the exact location should come from your trading strategy rather than an arbitrary number of pips.
Step 5: Enter Your Take Profit Price
For a Buy position, Take Profit is normally above the entry price.
For a Sell position, Take Profit is normally below the entry price.
Again, the target should be based on your trading plan.
Step 6: Review the Order
Before confirming the trade, check:
- Correct instrument
- Correct direction
- Correct volume
- Stop Loss level
- Take Profit level
Then submit the order.
How to Set Stop Loss and Take Profit on an Existing MT5 Trade
You do not always need to enter Stop Loss and Take Profit when opening the position.
MT5 also allows you to modify an existing trade.
The general process is:
- Open the Toolbox.
- Go to the Trade section.
- Find the open position.
- Select the modification option.
- Enter or change the Stop Loss.
- Enter or change the Take Profit.
- Confirm the modification.
The exact interface may vary slightly depending on the version of MT5 you are using.
How to Modify Stop Loss on MT5
There may be legitimate reasons to modify a Stop Loss.
For example:
- You are using a trailing strategy.
- Your trading plan allows Stop Loss adjustments.
- You are reducing risk after the market moves in your favor.
However, one dangerous habit is moving the Stop Loss farther away simply because you do not want to accept a loss.
For example:
You planned to risk $50.
The market moves against you.
Instead of accepting the planned loss, you move the Stop Loss farther away.
Now the potential loss might become:
$100.
Then:
$200.
This completely changes the original risk structure of the trade.
A Stop Loss should be part of the trading plan, not something you continually change because of emotion.
How to Modify Take Profit on MT5
Take Profit can also be modified while a position is open.
For example, you may decide to:
- Close part of a position
- Move your Take Profit based on new market information
- Use a trailing exit strategy
However, changing a Take Profit should also follow a clear rule.
A common problem is moving the target farther away every time price approaches it because you expect even more profit.
This can result in a winning trade reversing before your target is reached.
How Far Should Your Stop Loss Be?
There is no universal answer.
A Stop Loss should not be based on a random rule such as:
“I always use a 10-pip Stop Loss.”
Different markets have different levels of volatility.
A 10-pip Stop Loss may be reasonable for one strategy but far too small for another.
Your Stop Loss should usually consider:
- Market structure
- Volatility
- Support and resistance
- Trading timeframe
- Strategy rules
For example, a swing trader using the daily chart will usually require a different Stop Loss distance from a scalper trading the five-minute chart.
Stop Loss Distance and Pip Value
The distance between your entry price and Stop Loss is an important part of risk management.
For Forex traders, this distance is often measured in pips.
For example:
Entry: 1.1000
Stop Loss: 1.0950
Depending on the currency pair quotation, the difference may represent a 50-pip Stop Loss.
The monetary value of that distance depends on your position size.
A 50-pip Stop Loss with a small position may represent a small financial risk.
The same 50-pip Stop Loss with a large position may represent a significant risk.
This is why you should calculate both the Stop Loss distance and position size.
Our Pip Calculator can help estimate pip values for different instruments and trade sizes.
How to Calculate Risk Before Setting Your Stop Loss
Many beginners make this mistake:
They decide on a position size first.
Then they try to find a Stop Loss that fits that position.
The better process is usually the opposite.
Step 1: Find the Logical Stop Loss Level
Determine where your trade idea becomes invalid.
Step 2: Measure the Distance
Calculate the distance between your entry and Stop Loss.
Step 3: Decide How Much You Are Willing to Risk
For example:
Account balance: $5,000
Risk per trade: 1%
Maximum planned risk:
$50
Step 4: Calculate Position Size
Use the Stop Loss distance and maximum risk to determine an appropriate trade size.
This is exactly what our Position Size Calculator is designed to help with.
This sequence is important:
Stop Loss → Risk Amount → Position Size
Not:
Random Position Size → Random Stop Loss
How to Set a Take Profit Target
Take Profit should also have a logical basis.
Common methods include:
Support and Resistance
A trader may set Take Profit near an important resistance level for a Buy trade.
For a Sell trade, the target may be near support.
Risk-to-Reward Ratio
Some traders use a predefined risk-to-reward ratio.
For example:
Risk: 50 pips
Potential reward: 100 pips
Risk-to-reward ratio:
1:2
This means the potential reward is twice the planned risk.
However, a good risk-to-reward ratio alone does not guarantee a profitable strategy.
The probability of success also matters.
Market Structure
A trader may use previous highs, lows, liquidity areas, or other structural levels to define a target.
The best method depends on your trading strategy.
Using Risk-to-Reward Ratio on MT5
Suppose you plan a Buy trade.
Entry:
1.1000
Stop Loss:
1.0950
Your risk is approximately 50 pips.
If you want a 1:2 risk-to-reward ratio, your potential target could be approximately 100 pips above the entry.
That would place the target near:
1.1100
This does not mean that every trade should use a 1:2 ratio.
Some strategies may work with different ratios.
The important point is that you understand the relationship between:
- Potential loss
- Potential profit
- Probability of success
Before entering a trade, you can use our Forex Profit Calculator to estimate potential profits and losses based on your trade setup.
Stop Loss Does Not Guarantee the Exact Exit Price
This is an important point that beginners often misunderstand.
A Stop Loss is designed to trigger an exit process when the relevant level is reached.
However, it does not necessarily guarantee execution at the exact price you requested.
During fast-moving markets, the actual execution price may differ because of:
- Slippage
- Market gaps
- Low liquidity
- High volatility
For example, a major economic announcement may cause prices to move rapidly from one level to another.
Your Stop Loss can therefore be executed at a less favorable price than expected.
This is one reason why traders should understand the risks of trading during major news events.
Before opening trades around important announcements, check the economic calendar.
What Is a Trailing Stop?
A Trailing Stop is designed to move a protective stop level as the market moves in your favor.
For example:
You open a Buy trade.
The market begins moving higher.
A trailing mechanism may move the protective stop upward according to predefined conditions.
The goal is to potentially protect some profits while allowing the position to continue running.
However, trailing stops can also close a trade prematurely in a volatile market.
They are not automatically better than a fixed Stop Loss.
Whether you should use one depends on your strategy and market conditions.
Should You Move Stop Loss to Breakeven?
Moving Stop Loss to breakeven means adjusting the Stop Loss level near your entry price.
The idea is to reduce or eliminate the possibility of a loss after the market moves sufficiently in your favor.
For example:
Entry: 1.1000
The market rises to 1.1050.
You move your Stop Loss from 1.0950 to 1.1000.
If the market reverses, the trade may close near the entry level, subject to spreads and execution conditions.
Breakeven strategies can reduce risk, but they can also cause trades to close before reaching their original targets.
Therefore, breakeven should be part of a tested strategy rather than an emotional reaction.
Common Stop Loss and Take Profit Mistakes
Using a Stop Loss That Is Too Tight
A Stop Loss placed too close to normal market volatility may result in frequent losses.
Using a Stop Loss That Is Too Wide
A wide Stop Loss combined with excessive position size can create unacceptable risk.
Moving the Stop Loss Farther Away
This can turn a controlled loss into a much larger loss.
Trading Without a Stop Loss
This exposes the account to potentially unlimited downside in fast-moving markets.
Choosing Take Profit Based Only on Greed
A target should have a logical basis.
Ignoring Market Conditions
A reasonable Stop Loss in a quiet market may be inappropriate during major volatility.
A Simple Example of Stop Loss and Take Profit
Suppose you have:
Account balance:
$10,000
Risk per trade:
1%
Maximum planned risk:
$100
You identify a trade setup.
Entry:
1.2000
Stop Loss:
1.1950
Take Profit:
1.2100
Your Stop Loss distance is approximately 50 pips.
Your Take Profit distance is approximately 100 pips.
The approximate risk-to-reward relationship is:
1:2
You would then calculate your position size so that a 50-pip loss equals your planned maximum risk of $100.
This is a structured approach because every important part of the trade is defined before entry.
Stop Loss and Take Profit Are Part of Risk Management
Stop Loss and Take Profit should not be viewed as isolated features inside MT5.
They are part of a larger risk management process.
A complete trading workflow may look like this:
Analyze the market
↓
Identify entry
↓
Identify Stop Loss
↓
Calculate risk
↓
Calculate position size
↓
Set Take Profit
↓
Check the economic calendar
↓
Place the trade
↓
Manage the position according to the trading plan
For a deeper understanding of this process, explore our Forex risk management guides.
Should Every Trade Have a Stop Loss?
For most retail traders, using a predefined risk control mechanism is generally an important part of responsible trading.
Trading without a Stop Loss can expose an account to large losses if the market moves sharply against the position.
However, the exact risk management method depends on the trading strategy.
Some advanced strategies use alternative risk controls, but these should not be confused with simply entering a trade and hoping the market eventually reverses.
For beginners, understanding and using Stop Loss orders is usually a sensible starting point.
A Practical MT5 Stop Loss and Take Profit Checklist
Before clicking Buy or Sell, check:
- Do I understand why I am entering?
- Where is my Stop Loss?
- Why is the Stop Loss at that level?
- How many pips am I risking?
- What is my maximum financial risk?
- Is my position size appropriate?
- Where is my Take Profit?
- What is my risk-to-reward relationship?
- Is major economic news approaching?
- Does this trade follow my strategy?
If you cannot answer these questions clearly, you may not be ready to place the trade.
Final Thoughts
Learning how to set Stop Loss and Take Profit on MT5 is simple from a technical perspective.
The more difficult part is learning how to choose those levels logically.
A Stop Loss should not simply be a random number of pips, and a Take Profit should not simply be based on how much money you hope to make.
Both levels should be connected to:
- Your trading strategy
- Market structure
- Volatility
- Position size
- Risk tolerance
The most important principle is to define your risk before entering the market.
MT5 provides the tools to manage a trade, but you are responsible for deciding how much capital is at risk.
A structured approach can be summarized as:
Find the setup → Define the Stop Loss → Calculate risk → Calculate position size → Set Take Profit → Execute the trade
Once this process becomes a habit, Stop Loss and Take Profit stop being simple buttons inside MT5 and become part of a disciplined trading system.
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