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#1
28th September 2006, 12:43 PM
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Stop Loss Buy Order
Hi,
I am new to the world of stocks. I have applied for an account in ICICI direct. Can somebody explaiin in simpler term , what does this mean? Taken from FAQ from there website. Stop Loss Buy Order 'A' short sells Reliance shares at Rs325 in expectation that the price will fall. However, in the event the price rises above his buy price 'A' would like to limit his losses. 'A' may place a limit buy order specifying a Stop loss trigger price of Rs.345 and a limit price of Rs.350. The stop loss trigger price (SLTP) has to be between the last traded price and the buy limit price. Once the market price of Reliance breaches the SLTP i.e. Rs.345, the order gets converted to a limit buy order at Rs.350. Regards 
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#2
28th September 2006, 01:11 PM
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Re: Stop Loss Buy Order
Quote:
It means exactly what it says. First of all, this short selling is only allowed intraday on select stocks. You sell reliance at 325. If instead of falling, reliance starts to rise. You are in a loss. 'Stop loss buy order' is what you place to limit your loss to a specified level. Now, in order to do this, place a buy order at 350. However, you don't want to buy at 350 until the price movement is going against you, so you place a limit order with a stop loss of 345. This order will only be executed once the price touches 345. At this point the buy order gets activated with a limit price of 350 (i.e., your reliance holding is sold at not more than 350 and not less than 345). If price remains below 345, the order remains dormant. This way you protect your downside risk at a level that suits you. Remember, though, you have to square off your position during the day and ICICI Direct accepts square off orders till 2.50 pm after which the system automatically squares off your position at whetever price that prevails at that point. Hope this clarifies your query. Happy trading. Kuldeep 
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