Stop-loss is an order to stop, used for loss control. During the movement of the position towards losses, stop-loss goes off for its close. A broker closes the position, when the value of the ‘buy’ or ‘sell’ currency order reaches the setup level. If the chart’s curve has not moved in your direction, the loss is fixed, if the curve went to the profit direction and then reversed, the profit is fixed.  Thus, having setup the stop-loss in the loss point will help you not to lose a large sum of money. In case your forecast has appeared correct and the price is moving in the positive for the setup order direction, but you consider, that it is early to close the position, it is necessary to setup the stop-loss order in the passed through level, where it is still possible to save the profit. And further on irrespective of the future events you only have to wait for profit.

Take-profit is a pending order for the position close at the setup price, used for fixing the profit. Take-profit and stop-loss function on the analogy, though, take-profit is fixing only profit.

So, setting a take-profit order in a forecasted point in advance, you suppose that after a certain period of time the order will reach the profitable level, and you think that in this point exactly it is needed to close the position and fix the profit.

Stop-loss and take-profit are often setup together, in case the forecast has appeared true- you gain the profit, if no, you will lose only the sum you are prepared to lose.

The most part of trading terminals offer such service as a trailing stop. On setting up a trailing stop, the following occurs: the terminal does not operate until the position has not started its movement in the profit-bringing direction. At that moment, the terminal sets up a stop-loss at a certain distance from the current price. On receiving the quoting, at which the distance between the current price and the stop-loss will exceed the certain quantity of points, the terminal sends the command for the stop-order change by a few points distance from the current price. In accordance, a trailing-stop is a certain algorithm of stop-loss managing. But it is necessary to remember that this option is functioning only when the terminal is started up and exchanges the up-to-date information.

Added by InstaForex Staff