Stop loss price and trigger price?

Discussion in 'Beginners Guide' started by Shravan Reddy, Mar 5, 2009.

  1. Shravan Reddy

    Shravan Reddy Active Member

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    Can anyone tell me with an example how to place an order with stop loss price and trigger price?
    TIA :)
     
  2. ragavijay_1979

    ragavijay_1979 New Member

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    Dear Reddy,
    There are two situations where we use stop loss orders. One is we have brought some shares and waiting to sell it in a higher price. Second one is we may short sell it and wait for a fall and buy the same no quantities we sold earlier. I am giving an example case.

    1) For Buy and Sell:
    a) ICICIBANK is trading at Rs. 280.55 at 10:35 AM. I feel that price may go up.
    b) So I am buying 100 Units at Rs. 280.60 in Limit Price Mode. My target is 290 plus.
    c) But for a safe side i don't want to loose more than Rs. 5/- a share.
    d) For that I am placing a Sell Order in Stop loss mode. With Sale Price is 274.50 and trigger price is 274.95.
    e) I am choosing these values because, Round values are always strong. My guess is if it breaks 275 it may go further down. So I am using 274.95 as trigger price instead of using 275.
    f) For selling price i have give Rs. 274.50, reduced 45 Paise from the trigger price. Because when the price falls to 274.95 an sell order is placed immediatly for 274.50
    g) It would help us if the price reduces fastly.
    h) If the price crosses to 290 i would happily cancel the stop loss order and place a sell order for 290 and above.

    1) For Sell and Buy:
    a) ICICIBANK is trading at Rs. 280.55 at 10:35 AM. I feel that price come down.
    b) So I am Selling 100 Units at Rs. 280.60 in Limit Price Mode. My target is 270 plus.
    c) But for a safe side i don't want to loose more than Rs. 5/- a share.
    d) For that I am placing a Buy Order in Stop loss mode. With Buy Price of Rs. 285.50 and trigger price is 285.05.
    e) My guess is if it breaks 285 it may go further up. So I am using 280.05 as trigger price instead of using 280.
    f) For selling price i have give Rs. 285.50, Increased 45 Paise from the trigger price. Because when the price increases to 285.05 an buy order is placed immediatly for 285.50
    g) It would help us if the price increases fastly.
    h) If the price drop to 270 i would happily cancel the stop loss order and place a buy order for 270.

    -Vijay Raghavan
     
  3. Pralhad

    Pralhad Well-Known Member

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    Thanks a lot for detailed example.
     
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  4. rohangawale

    rohangawale Well-Known Member

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    Ragavijay.

    Thanks a lot for explaining the difference in very simple way.
    very good detailed explanation.
     
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  5. ijredart

    ijredart New Member

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    Are the above assumptions of mine correct? i am putting the assumptions in bold

    1) For Buy and Sell:
    a) ICICIBANK is trading at Rs. 280.55 at 10:35 AM. I feel that price may go up.
    That is clear
    b) So I am buying 100 Units at Rs. 280.60 in Limit Price Mode. My target is 290 plus.
    Setting limit price at 280.6 means that the system will stop executing ur order if the price reaches 280.6. If it had bought only 50 units till that point, then you get only those 50.
    c) But for a safe side i don't want to loose more than Rs. 5/- a share.
    Ok..thats good
    d) For that I am placing a Sell Order in Stop loss mode. With Sale Price is 274.50 and trigger price is 274.95.
    So now u have 50 shares bought at 260.8 and the system sells them all when the price reaches 274.95. Right?
    e) I am choosing these values because, Round values are always strong. My guess is if it breaks 275 it may go further down. So I am using 274.95 as trigger price instead of using 275.
    cool
    f) For selling price i have give Rs. 274.50, reduced 45 Paise from the trigger price. Because when the price falls to 274.95 an sell order is placed immediatly for 274.50
    i dont see any option for selling price in my terminal stop loss thing. i have options to enter limit price and trigger price only. where do i enter this selling price?
    g) It would help us if the price reduces fastly.
    :)
    h) If the price crosses to 290 i would happily cancel the stop loss order and place a sell order for 290 and above.
    why shud u cancek the order. it was already executed right when the price reached 280.6 ??
     
  6. chachi

    chachi Active Member

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    Hi ijredart,

    RagaVijay has explained the stop loss and trigger prices beautifully (But wonder when was ICICIBANK available at 280 :). Read it again and again till you understand completely.

    For your query under b)

    The system shall START executing the order if the best available price is 280.60 or below.

    For your query under d) and f)

    Point f) put up by vijay is modified as below to make it clear for you

    f) For stop loss: Select sell, select stop-loss and put Rs. 274.50 in Limit Price, reduce 45 Paise from the trigger price of 274.95. When the price falls to 274.95 or below a sell order will be executed for best available price between 274.05 and 274.50. (remember here if the price jumps down to 273 and stays below, your stop-loss sell will not be executed and you will be stuck. Hence when there is likely chances of high volatility you should select a good price for 'Limit price' to take care of this sudden jumps)

    So your stop loss sell selection shall be Limit price: 274.50, Trigger price: 274.95

    For your query under h)

    You are confused here. At this point you have bought some shares at 280.60 and have a not-executed stop loss order. When the price reaches 290.00, it is in your favour and you can take profit by canceling this stop loss order OR modifying the order to a sell Order at 290.00 or nearby price.

    Hope it is clear.

    Regards
    Chachi
     
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  7. ijredart

    ijredart New Member

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    As you said
    ==================
    For your query under b)

    The system shall START executing the order if the best available price is 280.60 or below.
    ====================

    so if it is not available now, will it keep checking till end of day?
     
  8. chachi

    chachi Active Member

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    Yes, it will be ON until it gets that price OR until you cancel the Order OR until the trading time is finished.

    Regards
    Chachi
     
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  9. anillegal

    anillegal New Member

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    pchh im unable to understand :(
     
  10. ijredart

    ijredart New Member

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