Stop Loss puzzle.................Help required

#1
I went through all threads in this portal refrerring to STOP LOSS but was not able to get clear insight to my problem which i am facing...so i just created new thread to get fair idea about it.

Here is my scenario...
Suppose i am doing an intrday trade for xyz share.
I bought 500 shares @ 100 each. Now i want to sell the shares as soon the price touches 102 and in order to insulate myself from any large loss in case price starts drifiting down i want to set 98 as my stop loss trigger.
How do i need to put my sell order in this case.
My brokerage account help says that The stop loss trigger price has to be between the limit price and the last traded price at the time of placing the stop loss order.
 
#2
To complete your trade, you need 2 out of 3 orders to get executed. 1 buy order (500 shares @100) and either of "sell order of Target 102", or "Stoploss Sell order at 98 which is <= CMP"

Make sure that when target is achieved, delete the Stoploss sell order, or when stoploss sell order is executed, then cancel the sell order at 102.

Stoploss sell order has 2 parts, 1) trigger 2) limit order. Bother trigger and limit orders must be less than current market price of the xyz share. we can't put 98 as stoploss trigger and limit when the xyz is trading below 98, say 97.90 or lower.

Here put these orders: Supposing the xyz share is trading at 100 to 101
1. Buy 500 xyz @ 100 <- this is usual way
2. Sell 500 xyz @ 102 <- again usual way
3. Sell 500 xyz @ 98 with trigger 98 <- here trigger should be greater than or equal to limit order in stoploss sell order. we can have 98trigger and 98limit in stoploss sell order, or 98.50 as trigger, and 98 as limit sell order. but NOT 98 as trigger and 98.05 as limit order in the stoploss.

now, when any of the 2) or 3) sell orders get executed, cancel the other (stoploss or) sell order.
 
#3
u have given me a nice insight.. thanks rizwaan ..

can we do the same for position [ short term ] trading.. i.e. one order - a sell order to sell for target price [ higher price ] n another sell order with stop loss to limit our losses.... i mean can we place both orders at the same time ???
 
#4
Thanks Rizwaan ...............that was the most crisp and clear answer i was looking for this puzzle.With right mix of examples you have enlightened me.
 
#5
u have given me a nice insight.. thanks rizwaan ..

can we do the same for position [ short term ] trading.. i.e. one order - a sell order to sell for target price [ higher price ] n another sell order with stop loss to limit our losses.... i mean can we place both orders at the same time ???
It's not possible to have a stoploss or any order beyond the day's session. all orders (limit, market, stoploss) will get expired after 3:30pm (market close).

Though we can put stoploss and sell order using AMO (after market order) before the market opens. But such orders can cause more trouble than benefit.
 
#6
Thanks Rizwaan ...............that was the most crisp and clear answer i was looking for this puzzle.With right mix of examples you have enlightened me.
You're welcome, I had to learn practical use of stop loss by doing many many trial-and-errors patiently (to check contract notes etc..). All the books say use stoploss (they simply mean exit when things go wrong). But practical implementation for indian markets were not explained. Even icicidirect university stoploss explanation confused me... Now, that I know, I'm glad to help. :)
 
#8
You're welcome, I had to learn practical use of stop loss by doing many many trial-and-errors patiently (to check contract notes etc..). All the books say use stoploss (they simply mean exit when things go wrong). But practical implementation for indian markets were not explained. Even icicidirect university stoploss explanation confused me... Now, that I know, I'm glad to help. :)
I have been doing my trials of stop loss in MSFL still hvn't succeeded yet.. and no one to help me out.. hope ur post helps me in tomorow's trading. rizwaan. thanks in advance. thanks a ton rizwaan.

regards and thnx
jogi
 

chaitanyagoa

Well-Known Member
#10