What is stop loss order and how to place it?
A Stop Loss Order is a tool to limit potential losses on a trade by automatically triggering a sale or purchase once a specified price is reached. This helps manage risk without the constant monitoring of the market.
Key Terms:
- Trigger Price: The price at which the stop loss order is activated.
- Limit Price: The price at which the order will be executed once the stop loss is triggered.
Example:
If you buy a stock at ₹1000 and want to limit your loss to ₹50, you can set a stop loss order with:
- Trigger Price: ₹950 (when the price falls to this level, the order will be activated)
- Limit Price: ₹945 (the price at which the stock will be sold once the trigger is activated)
Order Types:
- Buy Stop Loss Order:
- Trigger Price is set lower than the Limit Price.
- Example: Trigger Price at ₹950, Limit Price at ₹945.
- Sell Stop Loss Order:
- Trigger Price is set higher than the Limit Price.
- Example: Trigger Price at ₹1050, Limit Price at ₹1055.
How to Place a Stop Loss Order:
Website Platform:
- Log in to 5paisa.
- Select the scrip you want to trade.
- Click on Buy/Sell.
- Choose Advanced Buy/Sell.
- In Order Type, select Stop Loss.
- Enter Trigger Price: The price at which the order will be activated.
- Enter Limit Price: The price at which the order will be executed after activation.
- Enter Quantity: Specify the number of shares or units.
- Submit the order.
Mobile Platform:
- Log in to the 5paisa Mobile App.
- Select the scrip you want to trade.
- Tap on Buy/Sell.
- Choose Advanced.
- In Order Type, select Stop Loss.
- Enter Trigger Price: The activation price.
- Enter Limit Price: The execution price after activation.
- Enter Quantity: Number of shares or units.
- Place the order.
Additional Notes:
- Modification: You can modify the stop loss order before it’s triggered. Once triggered, partial executions prevent further modifications.
- Order Execution: The limit price ensures you do not sell or buy below or above a certain price. In volatile markets, actual execution might differ from the limit price.
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