what is sl in trading

In trading, SL stands for Stop Loss. It is a type of trading order designed to limit a traders potential losses on a position. A stop-loss order is a risk-management tool that automatically sells a security once it reaches a certain price (either a percentage or a dollar amount below the purchase price) . It is used to limit loss or gain in a trade. When a trader sets a Stop Loss Order, they specify a stop price, which is the price level at which the order will be triggered. There are two types of Stop Loss Orders: Stop-Loss Limit (SL) and Stop-Loss Market (SL-M) . The former is placed with a price and trigger price, while the latter is placed with only a trigger price. When the trigger price is reached, a sell limit order is sent to the exchange, and the order is squared off at the next available bid above the price. The Stop Loss Order is a powerful tool that traders can use to protect their trading capital and manage their risk exposure in the dynamic world of trading.