The trigger price is the point at which a buy or sell order becomes active for execution on the exchange servers. When the stock's price reaches the trigger price set, the order is sent to the exchange servers.
Once the stop-loss order is triggered, the limit price becomes the price at which shares will be sold or bought. To learn more about limit orders, see What are limit and market orders?
The stop-loss (SL) order consists of two price components:
The stop-loss price is also referred to as the stop-loss limit price.
The stop-loss trigger price is referred to as the trigger price.
Example Scenario
A client places an SL (Stop Loss - Limit) for ITC.
Once the stock price reaches ₹206, the order becomes active, triggering a limit order at ₹208 sent to the exchange.
The stock will be purchased at either ₹208 or a lower price if sellers are available at that point.
A Stoploss order is a passive order. The trigger price acts as a threshold, and the stoploss order becomes active only when the market price crosses this threshold, whether it's above or below the stoploss price. To learn more about stoploss orders, see What are stop loss orders and how to use them?
Did you know? A stoploss order is only valid for a trading day. If a stop loss order is not triggered during that day, it will automatically expire at the end of the trading session. To have an order that remains active across multiple trading sessions (up to 1 year) until the trigger condition is met, a GTT order can be placed. To learn more about GTT, see How to use the Good Till Triggered (GTT) feature?
The trigger price, also referred to as the stop price
stop price
A stop price is the price in a stop order that triggers the creation of a market order. In the case of a Sell on Stop order, a market sell order is triggered when the market price reaches or falls below the stop price.
The cost at which a buy or sell order gets activated for execution on the exchange (NSE or BSE) is known as the trigger price. Simply put, once the price of your stock reaches the trigger price decided by you, then the order is sent to the Exchange.
Investors set a stop-limit order by placing the stop price where they want the order to trigger and a limit price where they would like a trade execution. If the security reaches the specified trigger price, the limit order activates and executes if the price is at or better than the price specified by the investor.
When a stop-loss is triggered, it will execute the contract at the market price, not the stop-loss price. There is an increased risk of the execution price for higher volatility securities to be below the stop-loss price. A stop-loss order converts into a market order once the stop price is triggered.
A limit order sets a maximum price that you're willing to pay or a minimum price that you're willing to accept on a sale, whereas a stop order is triggered when an asset reaches a certain price and filled at the next available price.
Trigger Price calculation for Future Buy Positions: WAP on Underlying level-(( Margin on Positions - ( WAP on underlying level * Open Pos Qty * Min margin percentage)/ Open Position Quantity).
The trigger price is the point at which your buy or sell order is made available to the exchange servers for processing. In other words, the order is submitted to the exchange computers as soon as the stock price reaches the trigger price that you have chosen.
If the stock drops to the stop price (or trades below it), the stop order to sell is triggered and becomes a market order to be executed at the market's current price. This sell stop order is not guaranteed to execute near your stop price. A stop order may also be used to buy.
If the price has declined significantly and the investor is seeking to protect their profitable position against the subsequent upward movement, they can place the buy stop below the original opening price.
In case you choose to use a Limit price (as opposed to market price) for your Stop Loss order, you must remember the following guideline : - For a Buy order, the limit price must be greater than or equal to the trigger price. - For a Sell order, the limit price must be less than or equal to the trigger price.
Summary and conclusion - Stop-loss strategies work
The best trailing stop-loss percentage to use is either 15% or 20% If you use a pure momentum strategy a stop loss strategy can help you to completely avoid market crashes, and even earn you a small profit while the market loses 50%
The main disadvantage is that a short-term fluctuation in a stock's price could activate the stop price. The key is picking a stop-loss percentage that allows a stock to fluctuate day-to-day, while also preventing as much downside risk as possible.
What is Trigger price & Limit price in GTT request? Trigger price is the price at which your request will get triggered for sending order to exchange& limit price is the price at which your order will get placed at exchange.
How much to set in stop-loss order? It is common to have such a question one is trading, how much to set in stop-loss order? Most of the traders use the percentage rule to set the value of the stop-loss order. Usually, the one who wants to avoid a high risk of losses set the stop-loss order to 10% of the buy price.
Once the stock price reaches ₹206, the order becomes active, triggering a limit order at ₹208 sent to the exchange. The stock will be purchased at either ₹208 or a lower price if sellers are available at that point.
When the price drops or rises very fast, a market stop loss might execute at worse prices, and the limit stop loss might not execute at all. Check the next section to find out more about limit stop losses. Market orders are there to buy or sell something as fast as possible at the best available price right now.
When the price drops or rises very fast, a market stop loss might execute at worse prices, and the limit stop loss might not execute at all. Check the next section to find out more about limit stop losses. Market orders are there to buy or sell something as fast as possible at the best available price right now.
A Stop Loss is an instruction to close a trade at a specific rate or amount. If the market reaches your requested rate and you have lost the predetermined amount, the Stop Loss will trigger and automatically close your position. SL is mandatory on every position with the exception of non-leveraged BUY positions.
A classic stop loss (=if triggered sell immediately for any price) doesn't work outside of market hours (4AM to 9:30AM and 4:00PM to 8:00PM) because it triggers market order and only limit orders are permitted outside of market hours due to wide bid/ask spreads. Example.
Introduction: My name is Kerri Lueilwitz, I am a courageous, gentle, quaint, thankful, outstanding, brave, vast person who loves writing and wants to share my knowledge and understanding with you.
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