Stoploss Market Order and Stoploss Limit order - How to use ?

Hi All,

I've been using this forum extensively to explore my doubts related to equities. Its bin really helpful. Thanks to all those who patiently reply the 'Valuable Questions' and 'Silly Questions'

As Again, 'm here to ask a question related to 'Stoploss'.

As we know that Stoploss itself has 2 types, SL market order and SL Limit order.
I understand the concept, but dont know how to place it.

SL Limit order:- In a 'Stoploss Limit Order', Either in uptrend or Downtrend, When the Market price(CMP), reaches the 'Trigger Price' set, the order is changed to a limit order with the 'Limit Price' set.

In which case, if the Limit price is reached by the market price, the order may get executed. In a Fast moving volatile market, sometimes you may not see the 'Limit Price' again, which case, the order will not get executed.

Here, I'm able to set, both 'Trigger price' and 'Limit Price'. This part is very clear.

SL Market order:- In 'StopLoss Market Order', Either uptrend or Downtrend, When the market price(CMP), reaches the trigger price, the order is a 'Market Order' then. (In most case, the order will be executed)

Here, Since it is a 'SL Market order', I should be able to set only the 'Trigger Price'. So, once the trigger price is reached, then automatically it should be a Market order.We'll know the price of the order only after execution....
But in this case, once i set the 'Trigger Price', it is asking me to set the price. Without price, i'm not able to submit the order. WHY?

Please Shed some light on this silly question.

Thanks in Advance,
Hariom...

Hi all,
Can anyone answer my doubt?

Thanks,
Hariom...

Hello hariom08,
you are asking a good question. Because stop loss are very essential tools in the art of trading. but regarding your two questions I am not understand your second question.As we are trader we have to know mechanism of stop loss, because it is only save us from financial draw-down.The two types of stop loss are used for two different purposes.read this paragraph if it clears your doubts.

[Stop loss orders are designed to limit the amount of money that a trade can lose, by exiting the trade if a specific price (that is against the trade) is reached. For example, a trader might enter a long trade at 4,000, and place a stop loss order at 3,950. If the price goes against the trade and reaches 3,950, the stop loss order will be filled, which will exit the trade, thereby limiting the loss to 50 points.

Regardless of what you may be told by supposed professional traders, there is no question about whether stop loss orders should or should not be used (they should always be used if you were in any doubt). However, there is a question as to which type of order (market or limit) stop loss orders should use.
Stop Loss Market Orders

Stop loss market orders are stop loss orders that use stop market orders as their underlying order type. Stop market orders are placed at a specific price, and if the market price reaches the order price, the order will be executed as a market order.

Market orders are always filled, so the stop loss order will also always be filled, and the trade will definitely be exited. However, market orders are filled at the currently available best price (the bid price for a sell order, and the ask price for a buy order), which means that the stop loss could be filled at potentially any price. When a market is moving quickly, a stop loss market order can be filled at a price that is several ticks away from the stop loss price (the price at which the stop loss order is placed).
Stop Loss Limit Orders

Stop loss limit orders are stop loss orders that use stop limit orders as their underlying order type. Stop limit orders are placed at a specific price, and if the market price reaches the order price, the order will be executed as a limit order.

Limit orders are only filled at the order price (or at a better price if one is available), so the stop loss order will only be filled at the stop loss price. However, unlike market orders, limit orders are not always filled, which means that the stop loss order may not get filled, in which case the trade will not be exited. When a market is moving quickly (or if a market has a large bid / ask spread), a stop loss limit order can remain unfilled indefinitely, and the trade is was supposed to protect will remain active.
Which Type of Order Should be Used?

In general, stop loss orders should use stop market orders. The entire point of a stop loss order is to exit a trade, and a stop market order is the only type of order that will always accomplish this. The additional losses that are incurred from adverse fills (i.e. orders that are filled at unfavorable prices), are minimal compared to the potential loss that can arise from a trade that is not exited at all (due to an unfilled stop loss order). In addition, the potential for an adverse order fill, can be offset somewhat by placing stop loss orders at unique prices (i.e. avoiding placing stop loss orders where everybody else does).

I say in general, because there are some situations where a stop loss limit order can be used, such as a trailing stop where the stop loss price is already significantly in profit, or a stop loss order that is not being used as an emergency stop loss (i.e. a crash stop loss). However, regardless of the configuration of a trade's stop loss orders, every trade should use a stop loss market order that will exit the trade completely.]

Hi manaranjan500,

Firstly thanks for your reply, all the conceptual usage of the Stoploss is very well explained. But my problem is, how to set that in the portal or the software to use it.

Lemme explain the same with the picture.

Stoploss LIMIT order :-

Suppose I've 100 shares of unitech bought at the price of 83, Now when the market moves in downtrend and if I want to place a 'Stoploss limit order', I can place the order as 'Trigger price at Rs.80 and Limit price at Rs.78.
So, Now, when the market price reaches the 'Trigger price', it should essentially change the order as Limit order with a 'Limit Price' as Rs.78, and gets executed only if the price reaches Rs.78.
Please check my Reliance money trade page screenshot for this Example.

Stoploss Market Order :-

Similarly, for the same condition, if i need to place a 'Stoploss Market order', How can i place that. Because, in a market order, we can't set the price. But it is asking me to enter the price.
Please clarify on this.I've attached another screenshot for this too. I'm getting an error stating rate should be entered.

Hope you understand my question now. Sorry for the trouble again.

Thanks,
Hariom...

Hi All,
Again., Can someone understand my question and help me in this.

Thanks again,
hariom...

Hello
For example,
I entered long trade at 5600 and market close at 5650 and
I place a stop-loss order (after market order) limit 5640 and trigger 5641.
Next day if the market open with GAP DOWN by 60 points.
What will happen to my order ????

thanks in adv
jai

An order placed with a broker to sell a security when it reaches a certain price. It is designed to limit an investor's loss on a security position. A stop order becomes a market order once the stop price has been reached. Also known as a stop order or stop-market order.

This is to inform you that a ‘Stop Limit’ order is made if you want to minimize losses.

For e.g. If you have built up position, and the prices of these shares start falling you would want a safety value to unload your stocks. What you can do in such cases is place a stop loss order. A stop loss order is independent of any existing orders that you may have.

A Stop Limit order can be a limit or a market order. Such an order gets released to the exchange once the trigger rate is reached.

Trigger Rate:

Trigger rate is the rate at which you want to activate your Stop Limit order. Till the time trigger rate is reached, your order is stored in Special Attribute Order Book & once the same is reached, your limit or market order is generated into the Regular Lot Book.

Kindly note that there are two types of order books i.e. Regular Lot order book & Special Attribute order book.
Regular Lot order book stores all normal Limit & Market orders, while in Special Attribute order book all orders with special attributes like Disclosed Quantity, Stop Limits are stored.

For e.g. If you have bought 100 shares of Reliance industries @ Rs.300/- & you want to cut down your losses to the extent of Rs.270/- i.e. if Reliance industries reaches Rs.270/- you want to sell them off.

In this case you have to place orders in the following manners:

1. Click Stop Limit Order Box.
2. In the trigger rate specify Rs.275/-.
3. At the same time you have to place a limit rate of Rs 270/-

OR

2. In the trigger rate specify Rs 270.
3. Instead of specifying limit you can select market.


Execution:

If you have specified a limit rate, & once the trigger of Rs 275 is reached, your limit order will be generated into the Regular Lot order book & your trade will be executed at any rate between Rs 275 to Rs 270.

If you have specified a market rate & once the trigger of Rs.270/- is reached, your market order will be generated into the Regular Lot order book.

Dear sditn,

Thanks a lot. I was expecting a reply of this kind. Now its very much clear.

Regards,
hariom...