How does a stop loss trigger work?

[Trader07]

Yes, you're right. The term "stop loss" tends to confuse many ; including me when I was new to it. But who am I to question market terminology ?

SL orders can be used for entries as well as exits. Such orders are placed usually when one wants the orders to be executed at a price away from the current market price.

I'm still confused at your terminology. If your target Purchase price is 1015, then why do you call it stop loss ?

This is not the generally understood meaning of stop loss, I'm afraid

AGILENT

 

[aca_trader]

Yes, you're right. The term "stop loss" tends to confuse many ; including me when I was new to it. But who am I to question market terminology ?

SL orders can be used for entries as well as exits. Such orders are placed usually when one wants the orders to be executed at a price away from the current market price.

Don't we call the entry orders as "Limit Orders" and exit orders as "Stop Loss Orders".

Best Regards,
--Ashish

 

[Trader07]

Limit orders can be used for both entries and exits
Stop loss orders too can be used for both entries and exits.

It's the function rather than the name which is of importance.

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

Don't we call the entry orders as "Limit Orders" and exit orders as "Stop Loss Orders".

Best Regards,
--Ashish

 

[Agilent]

Limit orders can be used for both entries and exits
Stop loss orders too can be used for both entries and exits.

It's the function rather than the name which is of importance.

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

Trader,
Its the first time I am hearing of this concept ('stop loss' terminology being used to mean trigger to buy)

Maybe you can cite some reference from the Net to substantiate the correctness of this terminology ?

The concept of trigger price for entry is entirely sound, but it would be patently wrong to call that 'stop loss'


AGILENT

 

[Trader07]

Thanks for your insights. I prefer not to spend further time confabulating on the grammar of market terminology. I'd rather use that spare time to find new ways of making money in this tough market .

The originator of this thread seems to have got his questions answered, so I'll exit the scene.

best regards
T7

Trader,
Its the first time I am hearing of this concept ('stop loss' terminology being used to mean trigger to buy)

Maybe you can cite some reference from the Net to substantiate the correctness of this terminology ?

The concept of trigger price for entry is entirely sound, but it would be patently wrong to call that 'stop loss'


AGILENT

 

[Agilent]

Limit orders can be used for both entries and exits
Stop loss orders too can be used for both entries and exits.


best regards

Trader
Its entirely your prerogative for you to exit this thread when u wish to , but I can't help observing that its somewhat irresponsible on your part to confuse (relative) novices by making misleading statements like the one above.

And it's not a semantic (or grammatical ) issue alone. When u decide to set a trigger to buy, and call that the stop loss, its like trying to clap with one hand.

The (possible) loss will arise only when u have to unwind the original position. If you decide to 'cap' (ie put a ceiling on) this loss, then alone you will set a trigger for sale .. and THAT will be called the stop loss.

Leave emotion out of this, and read thru' the above (and maybe thru' some references on the Net) slowly .. then u will understand why the terminology is what it is.

AGILENT

 

[cooltetra]

Trader


And it's not a semantic (or grammatical ) issue alone. When u decide to set a trigger to buy, and call that the stop loss, its like trying to clap with one hand.

The (possible) loss will arise only when u have to unwind the original position. If you decide to 'cap' (ie put a ceiling on) this loss, then alone you will set a trigger for sale .. and THAT will be called the stop loss.


AGILENT

Hi Agilent
If you have used PIB, you will find them using the word STOPLOSS for a field which u use can use to enter/long or short at market. this is actually a buy stop/ sell stop.
May be the image enclosed will give a better understanding of what I want to convey.

Best Regards
Coool

 

[kuldeep49]

Trader
Its entirely your prerogative for you to exit this thread when u wish to , but I can't help observing that its somewhat irresponsible on your part to confuse (relative) novices by making misleading statements like the one above.

And it's not a semantic (or grammatical ) issue alone. When u decide to set a trigger to buy, and call that the stop loss, its like trying to clap with one hand.

The (possible) loss will arise only when u have to unwind the original position. If you decide to 'cap' (ie put a ceiling on) this loss, then alone you will set a trigger for sale .. and THAT will be called the stop loss.

Leave emotion out of this, and read thru' the above (and maybe thru' some references on the Net) slowly .. then u will understand why the terminology is what it is.

AGILENT

Agilent,
I think the terminology "stop loss" is misleading. The correct thing would be to use limit buy sell orders with limit triggers specified. When you place a buy order, you cannot place a sell order built in except in the 'margin plus' facility of ICICI Direct. A separate sell order with a limit & a trigger is required for you to protect the downside of your trade. Am I right?
Regards
Kuldeep

 

[Agilent]

Hi Agilent
If you have used PIB, you will find them using the word STOPLOSS for a field which u use can use to enter/long or short at market. this is actually a buy stop/ sell stop.
May be the image enclosed will give a better understanding of what I want to convey.

Best Regards
Coool

cool
Sorry I am not familiar with PIB. But can u pl explain in simple words what they mean by a buy 'stop'/sell 'stop'

Kuldeep... your post makes sense. Thanks

AGILENT

 

[cooltetra]

Hi Agilent
PIB (Power India Bulls) is a trading terminal from Indiabulls. If you look at the image, you will find STOPLOSS in one of the field.
I have interpreted the STOPLOSS field in PIB to be the price that will trigger your order at MARKET price.
While placing the order at MARKET and mentioning STOPLOSS, the then market price should be less than STOPLOSS price in case of long position and more than STOPLOSS for short position.

Here the same STOPLOSS order can be used to initiate a new position as well as end an existing one.
May be this is interpretation only in case of PIB users.

I totally agree to you as far as the meaning of STOPLOSS is concerned.
However, for a PIB user, these serves the purpose of initiating a new order or cutting an old one.

By Buy Stop, I mean, a price at or above which I will like to enter a new long trade. A Sell Stop, means a price at or below which I will take a short position.

Hope I am clear.

Best Regards
Coool.