Stop Loss and Take Profit
Where to place the stop, the risk-to-reward ratio, expected value.
A Stop Loss closes the position at the level where the trading idea is considered wrong. A Take Profit locks in the profit at a planned level.
The risk-to-reward ratio (R:R) compares the possible loss with the planned profit.
Profitability depends on both the share of winning trades and the R:R. With an R:R of 1:2 a strategy can be profitable even with 40% winning trades.