What is Stoploss and target ?

Stop-Loss

A stop-loss is an order you place to automatically sell (or buy) a security if its price moves against you by a certain amount. It’s designed to limit your losses on a trade.

  • Purpose: Protect your capital by cutting losses early.

  • Example:
    You buy a stock at $100 and set a stop-loss at $95.
    If the stock falls to $95, the stop-loss order triggers, and you sell automatically to avoid losing more.

Target (Take-Profit)

A target (or take-profit) is the price level where you plan to close your trade and lock in profits.

  • Purpose: Secure gains when the price reaches a favorable level.

  • Example:
    You buy a stock at $100 and set a target at $115.
    When the price hits $115, your order closes the trade, capturing the profit.

Why Use Them?

  • They help manage risk and reward.

  • Take the emotion out of decision-making.

  • Keep you disciplined with your trading plan.

Quick Summary:

TermMeaningPurpose
Stop-LossPrice level to limit lossesProtect your capital
TargetPrice level to take profitsSecure your gains

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