Stop loss buy

Here is a sample buy order of a stock in nse nowonline for SL-L (stop loss) order type.

I'm trying to understand this buy order.


Is it saying in simple words ..."Buy Reliance industries at price 1002 Rs ...and if the share price falls to 1001 Rs or goes below then sell automatically to save from huge losses"

Am I correct ?

1) Assuming RIL CMP is currently 1000, your stop loss - limit buy order will remain in passive order book.

2) Once RIL CMP clicks 1001, your order will become active and go to active order book.

3) Once RIL CMP clicks 1002, your order will get executed. Trade complete.

Your understanding is incorrect.

Your order says, BUY reliance if it goes up and touches 1001 [trigger price] for a limit price of 1002.

If reliance is trading around 1000, your order sits in the system till the LTP is equal to the trigger price of 1001. Once that is done, your order to buy at 1002 is released on to the system.

This order is in no way a stop loss order to protect you. It is a standalone order with condition to buy if a particular price is breached.

rgds,

Thanks for the reply. its still confusing. Need some gyan ... Please see my comments below.

price may never exactly match to 1002 in a volatile market . If there is no exact match to 1002 here , does that mean it will not be bought ?



ok. But as you see the screenshot shows order type as SL-L . This means stop loss - limit. This does not make any meaning then.

Thanks for your reply. Not yet clear. Have few confusions. Please see my comments below. I assume a case different than yours - what if the reliance price goes down and I plan to buy at a lower price.

.

No. I assume RIL CMP is currently 1005. price is going down. I'm planning to buy when it is 1002.
It can not reach the trigger price 1001 because It will first encounter 1002... does that mean my order will never become active in such scenario ?
well, as it did not meet the trigger price do you think order will get executed ?

What you are saying is not correct in India as on Today. That type of order can be placed only in Developed countries like US, UK, Europe etc.

There are Four types of Orders you can place in NSE NOW:
[1] BUY
[2] SELL
[3] Stop Loss - Limit
[4] Stop Loss - Market

These all orders are independent and you have place each order separately. You can not combine any two orders in one shot.

As shown in your picture, that type of order is normally placed as a stop loss limit order only after Short Sell. For example, reliance short sell done at 999 and now if price is going high to 1001 then cover the short position by placing a stop loss Buy limit order at 1002 with trigger price at 1001.

The other meaning of the same order which you have shown in picture is: At present reliance market price is 999. Now, Buy Reliance if market price is equal to or higher than 1001, with the limit order at 1002 -- This type of Buying is done only if you know that 1001 is break-out price which will take the reliance price higher very soon, other wise why anyone will buy reliance at higher price of 1002 then the current market price of 999 (which is lower)?

RIL is 1005 and you want to buy at 1002, then the above trigger will not work. a simple limit order [keep the trigger field blank] will do.

IF reliance drops down to 1002, your order is executed and THEN you put in a STOP LOSS order to protect your capital.


yes, the term "SL limit" indeed is not very clear to begin with. Took me some time before i could grasp it.

alright, let's see if we can use reliance example to understand it.

Firstly, as of now, we do not have a facility to place a BUY/SELL order and a STOP LOSS [protection of capital] in one go.

that said,
the next step is to enter a position.

You can buy at current price of 1005.

OR
you can put in a limit price of 1002. [ that's right, trigger not required when price is above what you want].

OR
you want RELIANCE to break out above 1010 and then buy: here comes trigger. The your order should say, if RELIANCe goes above 1010,[trigger] buy for 1011 [limit].

rgds

If you want to do like what you said in above statement then you need double margin money, then only you can do it.

Here is how:
Current Market price of reliance is 1005.
Now, Place a Limit BUY order at Rs. 1002 -- You will get your 1 share of reliance if price will come down to 1002 with the margin money of XYZ.

Now place another order as Limit SELL order at Rs. 1001 -- If reliance price comes down to 1001 then your short sell of 1 share order will be executed with the margin money of ABC.

You have to place both BUY and Sell order one by one but at the same time.

Your net position of reliance share is Zero (Buy done at 1002 and sell done at 1001). You saved money with double margin money :clap:

Now your total required margin is XYZ+ABC=PQR.

The same can be done in other countries with only XZY margin but here in India we need double margin money PQR because of NSE monopoly (NSE = Non-Sense Exchange) :rofl:

Limit Order means it executes the order at the limited mentioned price or below that price for buy. For sell limit order means, it executes the order sell at limited mentioned price or higher than that.

For example, if you keep reliance buy at 1002 limit order then you will get reliance at 1002 or below that price. This does not mean that you will get exactly at 1002, Because if reliance is at present at 1005 and suddenly very bad news comes then everybody will start selling reliance at 900 limit sell orders with very heavy volume that means you will get reliance below 1002 :thumb:

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