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What is the difference between a stop loss and take profit order?

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A take profit order allows you to close a profitable trade automatically at a price you set. This will only execute if the market price is triggered by your take profit level, which means your order will be filled at the next best available price and you still have a certain chance to get a worse or a better price than you expected.

A stop loss order is an order to close a losing trade automatically at a certain price in order to limit its loss. If you set a stop loss to a position as a close condition and it’s triggered, there is a chance it will be filled at a worse level.

Both types of orders are main risk management tools you can benefit from as a trader, especially if you are not actively following up on your account.

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