Query on "Stop Loss" in Sharekhan

chiragshanker · #1 29th November 2005, 04:44 AM

Hey Guys..

I am new to traderji and new to this whole share bazaar...

Have started trading with Sharekhan last week... Have a very basic query on its "Fast Trading" functioning... Tried getting it clarified with their customer care but they advised me to mail them... But people hardly reply by mails... Neways i am resending the mail to them...

Meanwhile I have seen that traderji is a very friendly place... So if someone using sharekhan around would request them to guide me how to do the "STOP LOSS" in the fast trade and is the "TRIGGER" field in the fast trade refer the same thing...

Many Thanks..
Chirag

bond008 · #2 5th December 2005, 04:38 PM

What is a Stop Loss Order?

It is an order placed with a broker to buy or sell once the stock reaches a certain price. A stop loss is designed to limit an investor's loss on a security position. Setting a stop loss order for 10% below the price at which you bought the stock will limit your loss to 10%. For example, let's say you just purchased RELIANCE at Rs.500.00 per share. Right after buying the stock you enter a stop loss market order for Rs. 450.00. This means that if the stock falls below Rs. 450.00 per share your shares will then be sold at the prevailing market price.

Positives and Negatives

The advantage of a stop order is you don't have to monitor on a daily basis how a security is performing. This is especially handy when you are on vacation or having a full time job that prevents you from watching your security for an extended period of time.

The disadvantage is that the stop price could be activated by a short-term fluctuation in a securities price. The key is picking a stop-loss percentage that allows a security to fluctuate day-to-day while preventing as much downside risk as possible. Setting a 5% stop-loss on a security that has a history of fluctuating 10% or more is not the best strategy: you will most likely just lose money on the commissions generated from the execution of your stop-loss orders. There are no hard and fast rules for the level at which stops should be placed. This totally depends on your individual investing style: an active trader might use 5% while a long term investor might choose 15% or more.

Another thing to keep in mind is that once your stop price is reached, your stop order is a market order, the price at which you sell may be much different from the stop price. This is especially true in a fast-moving market where stock prices can change rapidly.

prsrivastav · #3 5th December 2005, 10:26 PM

i am in dilema that somebody from broker side is viewing our stop loss price,it has often happened to me that the prices are trigered and then again shootup.this has happened to me in both side orders.

i dont know that some body is watching or not,but i have made one strategi which may be use full.

suppose you want to purchase a 100 shares at rs 200,then place a buy order for 10 shares and watch.then if price will go up you are in profit.but if price is falling (say 190) you stretch the sltp( to 170), and watch the price will still want to trigger you.then stretch more(say 155) until you see that it is not coming more down and then place a buy order of 100 shares at 160.which is a profitable trade(because earlier you are wanting it at 200).
i used this trick several times,and end with profit.
The above trick is only possible if somebody is wataching your margine position.otherwise it is a complete co-incidence.

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