Stop Loss Orders and Limit Orders are types of orders used in trading stocks, foreign exchange (FX), and other assets. Each has different purposes and functions.

A Stop Loss Order is used by investors to minimize losses. This order is set to automatically trigger a buy or sell order when a specific price is reached. It is used to limit the losses on a position held by the investor.

For example, if an investor buys a stock and the stock price begins to unexpectedly fall, a Stop Loss Order can be set. For instance, the order can be set to automatically sell if the stock price falls 10% from the purchase price. This helps the investor reduce the risk of significant losses.

A Limit Order is used by investors to lock in profits. This order is set to automatically trigger a buy or sell order when a specific price is reached. It is used when investors want to trade at a particular price.

For example, in foreign exchange (FX) trading, if an investor buys a currency pair, they might have a profit target. For instance, a Limit Order can be set to automatically sell if the currency pair’s price rises 10% from the purchase price. This allows the investor to secure the profit.

The difference between Stop Loss Orders and Limit Orders lies in the conditions under which the orders are triggered and their purposes. Stop Loss Orders are used to limit losses, while Limit Orders are used to lock in profits. Both types of orders are useful tools for investors to automatically manage their trades and control risks and profits.