[NEWB] Question regarding Stop Loss

L

lord_horn_asstr

New Member
#1
#1
Dear All Senior Members,

I have a small question about stop loss please, in the normal long position. In this example I am trading intraday.

1. I open my trading software say example ODIN at 9:30am
2. I buy intraday 100 shares of HDFC at 1200 each. During the day, I expect the price to go up.
3. However, to be safe, I put a stop loss at 1100.
4. Now instead of going up as I expected, the market goes down (much to my disappointment).
5. What happens is this... the price reduces...from 1200 -> 1190 -> 1150 -> 1120 and then, it directly hits 1080 (note that the move from 1120 to 1080 directly went BELOW my stoploss, that is, it bypassed my stoploss)

My question is: In this case, will the stop loss hit? And if it hits, will it hit at 1100 (what I had put in ODIN), or will it hit at 1080 (which is where it landed when it went directly from 1120 to 1080). Or, will the stoploss NOT BE TRIGGERED at all? Or, will the stoploss be triggered at the market price below the stoploss whenever someone is ready to buy my 100 HDFC shares?

If the stoploss does not trigger, then is it because the market bypassed my stoploss or whether I should have given a different type of stop loss? (I read that there are also different types of stop losses)

Thanks again for everything.

Regards
 
T

throwawayacc123

Well-Known Member
#2
#2
lord_horn_asstr said:
Dear All Senior Members,

I have a small question about stop loss please, in the normal long position. In this example I am trading intraday.

1. I open my trading software say example ODIN at 9:30am
2. I buy intraday 100 shares of HDFC at 1200 each. During the day, I expect the price to go up.
3. However, to be safe, I put a stop loss at 1100.
4. Now instead of going up as I expected, the market goes down (much to my disappointment).
5. What happens is this... the price reduces...from 1200 -> 1190 -> 1150 -> 1120 and then, it directly hits 1080 (note that the move from 1120 to 1080 directly went BELOW my stoploss, that is, it bypassed my stoploss)

My question is: In this case, will the stop loss hit? And if it hits, will it hit at 1100 (what I had put in ODIN), or will it hit at 1080 (which is where it landed when it went directly from 1120 to 1080). Or, will the stoploss NOT BE TRIGGERED at all? Or, will the stoploss be triggered at the market price below the stoploss whenever someone is ready to buy my 100 HDFC shares?

If the stoploss does not trigger, then is it because the market bypassed my stoploss or whether I should have given a different type of stop loss? (I read that there are also different types of stop losses)

Thanks again for everything.

Regards
Click to expand...
It depends on the kind of SL order you set. if you set Stop loss limit order it will get triggered but no guarantee of filling unless price trades at that specified limit level.In this case you loss will be limited but no guarantee that price will trade at this level right after triggering.

if you set stop loss market order , your order will get triggered but the fill will be at market price AFTER trigger. Where the market price will be depends on market.It could be few points away from your trigger price. Hence the loss will more than in the above case of SL limit orders.

Slippages are quite common in stocks.

SL - limit : Loss is limited and controlled but no guarantee of fill.
SL - Market : Loss will be more than planned risk but guaranteed to fill .
 
A

amsin21

Well-Known Member
#3
#3
lord_horn_asstr said:
Dear All Senior Members,

I have a small question about stop loss please, in the normal long position. In this example I am trading intraday.


Regards
Click to expand...
Slippage can happen any time. In your case SL-L (SL limit) order will be partially filled or simply sits there are as an open order incurring loss. If you use SL-L order place the order with a descent distance between the trigger price and SL price. To be safe and to get 100% fulfillment use SL-M (SL market) order.
 
L

lord_horn_asstr

New Member
#5
#5
Many thanks everyone. It's a great learning experience.

Not being from the financial market, please excuse this question, but when you say "fill an order" that means execute an order for the appropriate number of lots, is that correct?

Thanks again in advance.
 
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