It is an order which enables the investor to place two orders simultaneously. 1) The price at which he/she would sell the investment to book profits, 2) The price at which he/she would sell the investment to reduce losses.
For example, suppose MR.X has purchased shares @₹100. He would like to sell his shares if the stock went up to ₹110 (where he makes a profit of ₹10) or if the stock price went down to ₹98 (where he makes a loss of ₹2). Mr.X can place a take profit and stop-loss order as follows: Take profit price = ₹110, Stop loss price = ₹98. If the stock went up to ₹110, then his shares will be sold and automatically the stop loss order will get cancelled. Similarly, if the stock went down to ₹98, his shares will get sold and the take profit order will get cancelled.
Note: Due to the underlying volatility in the Crudeoil and Natural Gas contracts especially on the Inventory days, most of the time, both the Stoploss and/or Target order gets triggered in BO/CO trades. To avoid this, we suggest the traders to use wider Stoploss/Target on such inventory day.