A stop-loss order is a kind of limit order. There are two kinds of limit orders, one is a stop-loss order, and the other is a take-profit order. Stop-loss orders control losses and take-profit orders control profits.

Stop loss orders can set the price of closing positions. If the market is in the opposite direction to your forecast, a stop loss order can control the loss; If the market moves in the predicted direction, you can lock in the profit by adjusting the stop loss order to prevent the market from suddenly moving in the opposite direction.

Stop-loss limit orders avoid the uncertainty of the execution price of stop-loss orders. In the stop-loss limit order, investors should indicate two prices: stop-loss price and limit price. Once the market price reaches or exceeds the stop-loss price, the stop-loss limit order will automatically form a limit order.

For example:

Suppose the stop price of the limit order is $65,438+09 and the stop price is $20. The stop-loss price of 19 USD is valid only when the stock market price is lower than 20 USD. In this way, the transaction price must be between 19 and $20.