What Is Take-Profit Order? Meaning & Example

A stop-loss is an order that closes a position automatically if price moves against you to a set level. It helps limit losses, though fast markets can cause fills worse than the stop price.

A limit order sets the maximum price you will pay to buy or the minimum you will accept to sell. It gives price control but may not fill if the market never reaches your price.

The risk-reward ratio compares how much you could lose on a trade with how much you could gain. Many traders look for setups where potential reward is at least twice the risk.