Entry, stop loss, take profit — the 3 things every trade needs
Before you ever click buy or sell, three numbers should already exist in your head: where you're entering, where you're wrong (stop loss), and where you're right (take profit).
If you can't answer all three before entering, you're not ready to enter. This one habit alone eliminates most impulsive, emotional trades.
These three numbers also let you calculate your risk-to-reward before you even place the trade — so you know if it's actually worth taking, not just tempting.
These three numbers also let you sanity-check a trade before you take it, not just after. If your stop loss has to sit unreasonably far away just to avoid obvious noise, or your target sits past a major resistance level that's likely to reject price first, that's useful information the numbers are giving you before you've risked anything.
Write them down somewhere outside your head — a notes app, your journal, anywhere. The moment a trade is open and moving, memory gets unreliable fast, and a number you "meant" to use isn't the same as one you can actually check against.
Key takeaway
No trade should ever be placed without already knowing your entry, your stop loss, and your target.
Example
Before entering, say out loud: "I'm buying XAUUSD at 2,650, stop at 2,635, target at 2,680." If you can't finish that sentence with real numbers, you're not ready to click buy yet.
Try this
Next trade you consider taking, write the entry, stop loss and take profit down before you enter, not after. Compare it to what you'd have said without writing it down.
This lesson is part of the free TDWK Academy — 40 lessons from zero to funded trader, with progress tracking and a certificate exam.
Continue in the full Academy →