What's the difference between stop loss and take profit?

<p id="isPasted">A stop-loss and a take-profit are both automated orders used in trading to manage risk, but they serve opposite purposes. A stop-loss order is used to limit potential losses on a position, while a take-profit order is used to lock in gains once a predetermined price target is reached.&nbsp;</p><p>Key differences summarized</p><p>&nbsp; &nbsp; &nbsp; Feature &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; Stop-Loss Order (SL) &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;Take-Profit Order (TP)</p><table data-animation-nesting="" data-complete="true" data-sae="" style="border: none; border-collapse: collapse; table-layout: auto; width: 652px; color: rgb(230, 232, 240); font-family: &quot;Google Sans&quot;, Roboto, Arial, sans-serif; font-size: 14px; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-align: start; text-transform: none; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; white-space: normal; background-color: rgb(16, 18, 24); text-decoration-thickness: initial; text-decoration-style: initial; text-decoration-color: initial;" id="isPasted"><tbody data-complete="true"><tr data-complete="true" data-sfc-cp=""><td colspan="undefined" data-complete="true" data-sfc-cp="" style="border-bottom: 0.8px solid rgb(45, 47, 53); min-width: 4em; vertical-align: top; padding: 12px 16px 12px 0px; color: rgb(230, 232, 240); font-family: &quot;Google Sans&quot;, Roboto, Arial, sans-serif; font-size: 14px; line-height: 22px;">Primary Goal</td><td colspan="undefined" data-complete="true" data-sfc-cp="" style="border-bottom: 0.8px solid rgb(45, 47, 53); min-width: 4em; vertical-align: top; padding: 12px 16px 12px 0px; color: rgb(230, 232, 240); font-family: &quot;Google Sans&quot;, Roboto, Arial, sans-serif; font-size: 14px; line-height: 22px;">To limit the potential loss on a trade.</td><td colspan="undefined" data-complete="true" data-sfc-cp="" style="border-bottom: 0.8px solid rgb(45, 47, 53); min-width: 4em; vertical-align: top; padding: 12px 0px; color: rgb(230, 232, 240); font-family: &quot;Google Sans&quot;, Roboto, Arial, sans-serif; font-size: 14px; line-height: 22px;">To secure profits once a target is hit.</td></tr><tr data-complete="true" data-sfc-cp=""><td colspan="undefined" data-complete="true" data-sfc-cp="" style="border-bottom: 0.8px solid rgb(45, 47, 53); min-width: 4em; vertical-align: top; padding: 12px 16px 12px 0px; color: rgb(230, 232, 240); font-family: &quot;Google Sans&quot;, Roboto, Arial, sans-serif; font-size: 14px; line-height: 22px;">Trigger Condition</td><td colspan="undefined" data-complete="true" data-sfc-cp="" style="border-bottom: 0.8px solid rgb(45, 47, 53); min-width: 4em; vertical-align: top; padding: 12px 16px 12px 0px; color: rgb(230, 232, 240); font-family: &quot;Google Sans&quot;, Roboto, Arial, sans-serif; font-size: 14px; line-height: 22px;">The price moves against your position to a specified, less favorable price.</td><td colspan="undefined" data-complete="true" data-sfc-cp="" style="border-bottom: 0.8px solid rgb(45, 47, 53); min-width: 4em; vertical-align: top; padding: 12px 0px; color: rgb(230, 232, 240); font-family: &quot;Google Sans&quot;, Roboto, Arial, sans-serif; font-size: 14px; line-height: 22px;">The price moves in your favor to a specified, more favorable price.</td></tr><tr data-complete="true" data-sfc-cp=""><td colspan="undefined" data-complete="true" data-sfc-cp="" style="border-bottom: 0.8px solid rgb(45, 47, 53); min-width: 4em; vertical-align: top; padding: 12px 16px 12px 0px; color: rgb(230, 232, 240); font-family: &quot;Google Sans&quot;, Roboto, Arial, sans-serif; font-size: 14px; line-height: 22px;">Psychological Role</td><td colspan="undefined" data-complete="true" data-sfc-cp="" style="border-bottom: 0.8px solid rgb(45, 47, 53); min-width: 4em; vertical-align: top; padding: 12px 16px 12px 0px; color: rgb(230, 232, 240); font-family: &quot;Google Sans&quot;, Roboto, Arial, sans-serif; font-size: 14px; line-height: 22px;">Helps traders overcome the fear of a losing trade getting worse by automatically exiting.</td><td colspan="undefined" data-complete="true" data-sfc-cp="" style="border-bottom: 0.8px solid rgb(45, 47, 53); min-width: 4em; vertical-align: top; padding: 12px 0px; color: rgb(230, 232, 240); font-family: &quot;Google Sans&quot;, Roboto, Arial, sans-serif; font-size: 14px; line-height: 22px;">Helps traders overcome the greed of hoping for "just a little more" by automatically securing a gain.</td></tr><tr data-complete="true" data-sfc-cp=""><td colspan="undefined" data-complete="true" data-sfc-cp="" style="border-bottom: 0.8px solid rgb(45, 47, 53); min-width: 4em; vertical-align: top; padding: 12px 16px 12px 0px; color: rgb(230, 232, 240); font-family: &quot;Google Sans&quot;, Roboto, Arial, sans-serif; font-size: 14px; line-height: 22px;">Placement (for a long position)</td><td colspan="undefined" data-complete="true" data-sfc-cp="" style="border-bottom: 0.8px solid rgb(45, 47, 53); min-width: 4em; vertical-align: top; padding: 12px 16px 12px 0px; color: rgb(230, 232, 240); font-family: &quot;Google Sans&quot;, Roboto, Arial, sans-serif; font-size: 14px; line-height: 22px;">Placed below the entry price.</td><td colspan="undefined" data-complete="true" data-sfc-cp="" style="border-bottom: 0.8px solid rgb(45, 47, 53); min-width: 4em; vertical-align: top; padding: 12px 0px; color: rgb(230, 232, 240); font-family: &quot;Google Sans&quot;, Roboto, Arial, sans-serif; font-size: 14px; line-height: 22px;">Placed above the entry price.</td></tr><tr data-complete="true" data-sfc-cp=""><td colspan="undefined" data-complete="true" data-sfc-cp="" style="border-bottom: 0.8px solid rgb(45, 47, 53); min-width: 4em; vertical-align: top; padding: 12px 16px 12px 0px; color: rgb(230, 232, 240); font-family: &quot;Google Sans&quot;, Roboto, Arial, sans-serif; font-size: 14px; line-height: 22px;">Execution</td><td colspan="undefined" data-complete="true" data-sfc-cp="" style="border-bottom: 0.8px solid rgb(45, 47, 53); min-width: 4em; vertical-align: top; padding: 12px 16px 12px 0px; color: rgb(230, 232, 240); font-family: &quot;Google Sans&quot;, Roboto, Arial, sans-serif; font-size: 14px; line-height: 22px;">Once the stop price is hit, the order becomes a market order and is executed at the next available price, which may be different due to slippage.</td><td colspan="undefined" data-complete="true" data-sfc-cp="" style="border-bottom: 0.8px solid rgb(45, 47, 53); min-width: 4em; vertical-align: top; padding: 12px 0px; color: rgb(230, 232, 240); font-family: &quot;Google Sans&quot;, Roboto, Arial, sans-serif; font-size: 14px; line-height: 22px;">Is a limit order that executes at the specified price or better.</td></tr><tr data-complete="true" data-sfc-cp=""><td colspan="undefined" data-complete="true" data-sfc-cp="" style="border-bottom: none; min-width: 4em; vertical-align: top; padding: 12px 16px 12px 0px; color: rgb(230, 232, 240); font-family: &quot;Google Sans&quot;, Roboto, Arial, sans-serif; font-size: 14px; line-height: 22px;">Risk Management Role</td><td colspan="undefined" data-complete="true" data-sfc-cp="" style="border-bottom: none; min-width: 4em; vertical-align: top; padding: 12px 16px 12px 0px; color: rgb(230, 232, 240); font-family: &quot;Google Sans&quot;, Roboto, Arial, sans-serif; font-size: 14px; line-height: 22px;">Acts as a financial safety net, defining your maximum risk on a trade.</td><td colspan="undefined" data-complete="true" data-sfc-cp="" style="border-bottom: none; min-width: 4em; vertical-align: top; padding: 12px 0px; color: rgb(230, 232, 240); font-family: &quot;Google Sans&quot;, Roboto, Arial, sans-serif; font-size: 14px; line-height: 22px;">Helps structure a clear exit strategy for profitable trades.</td></tr></tbody></table>