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.