What is Stop Loss (S/L)?

A Stop Loss (S/L) order is a type of trading order used to limit potential losses in trading. It works by automatically closing a position once the market reaches a specified amount of loss set by the trader.

The main purpose of a Stop Loss order is to prevent further losses if the price moves in an unfavorable direction. When the market price reaches the set level, the Stop Loss order triggers, and the position is closed automatically at the next available price, preventing further losses.