Types of Stop loss orders
The following are two methods of using stop loss order
1.Stop Loss Market Order
2.Stop Loss Limit Order
3. Trigger price - The Trigger price is the rate at which the traders want to activate the Stop orders either limit order or market order.

A small example to understand the working of stop loss order is as follows

Suppose If a trader has bought 50 shares of Tata Steel @ Rs.800/- and he want to minimize the losses till the extent Rs 760.

In above scenario the traders can place orders in the following two ways

A. Stop Loss Limit order
1. Click Stop Limit Order Box.
2. In the trigger rate specify Rs.755/-.
3. At the same time you have to place a limit rate of Rs 760/-

If a trader has placed a stop loss trigger limit order and once the trigger of Rs 755 is reached, the limit order will become the regular order and the trade will be executed at any rate between Rs 755 to Rs 760.

OR

B. Stop Loss trigger Market order
1. In the trigger rate specify Rs 760.
2. Instead of specifying limit trader has to select Market.

If a trader has placed a Market order and once the trigger of Rs.760/- is reached, the market order will become the Regular book and the order will be executed with the available rate at that time.
What is Stop Loss Order?
In simple words the stop loss order is used to minimize the losses in share market.

A stop loss is an order placed to buy or sell a stock once the price of a stock moves above or below a specified price by a trader.

Stop loss order is great method to save trader from heavy losses.
The stop loss order is placed with trigger price.
The trigger price is the price, if touched, the order gets activated.

Why it is used?
Stop loss is used to limit/reduce the losses in share market. It is mostly used by traders as compared to investors.
It is used in share market, future derivative, options, commodities and currency trading.
Stop loss order can be used to buy as well as to sell.
(Short sell order means first selling at high price and then buying at lower price. This only happens in day trading)
All About Stop Loss
1. Stop Loss Market Order
The stop loss market order is an order placed to buy or sell a stock at the current market price of the stock.

The current market price is the price at which the stock is trading at that given time.
This type of stop loss order gives the trader no control over the price at which the trade will be executed because it will get executed based on the current market price at that given point of time.

The examples are as follows 

Stop loss Buy market order
A buy stop market order is typically used to limit losses on a short sell.

Condition to place the order - A buy stop market order is always above the current market price.
For example, if a trader does short sell hoping the stock price will go down and he can book profits at a lower price but the trader can put a buy stop order to protect himself against losses if the price moves up.
Stop loss Sell market order
A Sell stop market order is typically used to limit losses on a buy order.

Condition to place the order - A sell stop price is always below the current market price.
For example, if a trader holds a stock currently valued at Rs.100 and is worried that the value may drop then he can place a sell stop market trigger order at Rs.95. If the share price drops to Rs.95, the exchange will sell the order at the next available market price. This will limit the traderís losses if the stock price falls further down.

Advantages and disadvantages of the stop loss market order
The main advantage of a stop loss market order is that the stop loss order will always get executed.
The main disadvantage of the stop loss market is that the trader has no control over the price at which the transaction is executed.

Stop loss orders are great insurance policies that cost you nothing and can save you a fortune. Unless you plan to hold a stock forever, you should consider using them to protect yourself.
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2. Stop Loss Limit Order
A stop loss limit order is an order to buy a stock at a specified price by a trader. This type of stop losses gives the trader some control over the price at which the trade is executed.

A stop loss buy limit order can only be executed by the exchange at the specified limit price or lower.

For example, if a trader is having short sell order and wants to protect his trade but doesn't want to pay more than Rs.100 for the stock, the investor can place a stop loss buy limit order to buy the stock at any price up to Rs.100. By entering a limit order rather than a market order, the investor will not be caught buying the stock at Rs.110 if the price rises sharply.

Alternatively a stop loss sell limit order can only be executed at the limit price or higher.

Advantages and disadvantages of the stop loss limit order
The main advantage of a stop loss limit order is that the trader has total control over the price at which the order is executed.
The main disadvantage of the stop loss limit order is that in a fast moving volatile market your stop loss order may not get executed if there are no buyers/sellers at the mentioned limit price.

Note - Stop loss order are mostly used during day trading to protect their orders from sudden surge in stock prices.
If you are doing day trading then using stop losses would definitely help you to protect your losses.