How does a stop loss trigger work?

#51
The concept goes like this, Suppose you want to buy stocks and you also do not want to loose much on the purchase, you use the stop loss option. This works like this.
1. You buy a share of XYZ comp for Rs.10 and is now in your account.
2. You feel that the share may fall down, now you want to minimise your loss what one does is to sit in front of the system and watch the slide show(price slide) and eventually may have to sell incurring more loss. This is where you use the stock option. In this there are 2 things you have to know:the share should already be bought and be credited to your account and once you have bought the share you place a sell order with a stoploss option wherein you indicate the trigger price which is slightly higher than the sell price or equal to the sell price.
In the example above you have decided not to loose more than 1 Rupee per share, in this case you place a sell order with a trigger price of 9.50 and selling rate which may be equal to 9.50 or 9 which you would have decided. When the market slides down and reaches a price of 9.50 your shares are sent to the queue and if it reaches 9 they are automatically sold or else they remain with your acccount.

The same concept can be used even for placing buy stoploss where in you would have already sold the share you had bought. Do some experiments with one or 2 shares of some company on some trading day and you would understand the concept better.
:) Vijay Bhaskar
 
#52
Hi Friends
Give me one best example for stoploss

Thanks & Regards
Sridhar
Ok, Now suppose I had purchased Reliance at Rs.2000.
I had purchased it thinking that it will gain but there is always downside for which I need some cover. So here comes the Stop Loss(Sell).
I will put sell order as below :
Reliance, Sell Price 1900, Trigger Price : 1905.

Now if I dont put the trigger price, the sell order will be executed immediately at 1900, but since I had put trigger price, the order will not be released in the market till the market price reaches 1905. So my purpose is solved !!!

I am a newbee and any corrections/comments on the above are always appreciated!!
Thanks !
 
#53
<<
Agilent, Aca_trader - I suggest that you don't carry the confusion in your mind. It would be best if you have your broker to demonstrate the function of the various types of orders available on your trading terminal.

best regards[/QUOTE] >>

Good one. I can feel your concern!

Thanks
JP
 
#54
hi marcus,
first of all all i would like to thanks that the explanation was given by you was superb.
in one place i have confusion that as u mentioned that:

"for a limit sell order it is the "minimum" price you are willing to sell for.
let suppose you have purchased A at 95 and want to lmit your loss at 90 in other words you want to sell should the price go below 90, although it is
cutrrently above 90. Now if you give a lmit sell order at 90 what will happen?

A will be sold immediately at 95 why? Because in a limit sell order the lmit price is the
minimum price you will sell at, so it means you are willing to sell at a minimum of 95 or
better, hence it will be sold at 95 "

here limit sell order is 90 then how it will be sold at 95 ? didn't get.
and also can trigger price works on buying share too??

thanks....
 

nac

Well-Known Member
#56
^ GOZMO you are talking about limit order. I can help you in this regard.

You are ready to sell @ 90 but the market is giving you better price so it executes @ 95.
 
#57
thanks.

please answer some question and hope my doubt on stop loss ,limit , trigger will be cleared. so how to place an order on the following condition and if it fails till market closed what will happen ? please tell..

for buying (intraday)
----------
1. suppose i want to buy X share when it comes to 10/- or less. cmp is 12/- and dont want lose more then 1 rupee if rate goes down.what will happen if order not executes?

2. suppose i want to buy Z share what ever rate when market opens?

for selling (intraday)
---------
1. suppose i want to sell above X share when the price is 11/- or more .


one thing i observed some days ago that
i placed an buy order for 100 Y share on limit price of rs 10/-. the LTP price came to rs 10/- but the order still remained pending. could you tell me why ? can it be happened on sale of share?

please answer...
thanks
 

anuragmunjal

Well-Known Member
#58
hi
six pages on how 2 put a stop loss...... wow!!!!
there are three ways in which u can put a stop loss. taking a hypothectical eg. if u buy reliance @ 2000 and want 2 put a stop loss @ 1900
1. put in the trigger price as 1900 and trade price as 1900. just as the rate touches 1900,ur sl gets triggered and makes a sell bid @ 1900. now if there is a buyer @ 1900, ur stock gets sold but the disadvantage is that if the stock breaks down and goes below 1900, u will remain a seller @ 1900 and ur stock does not get sold and ur original pupose of putting a sl is not met.
2. put in the trigger price @ 1900 and trade price as 'market'. now just as the stock touches 1900, the sl gets triggered and sells at whatever rate there is a buyer in the mkt. this is fine in a liquid stock like reliance, but in a illiquid stock, even if the buyer is 30 rs. below 1900, it will sell at that rate.
3. put in the trigger price @ 1900 and a limit order of (lets say 1895) as the trade price. in this case, just as the sl gets triggered, it will sell to any buyer at or above 1895. in case there is no buyer above 1895, it will make a sell bid @ 1895.

hope this solves ur confusion

regards

Anurag
 
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columbus

Well-Known Member
#60
WOULD THAT ORDER BE GOOD FOR ONE DAY OR IT WOULD GET EXECUTED WHEN EVER PRICE REACHES THAT LEVEL.:confused:
All our orders are GFD (Good For Day) orders.