in which of the products below we do not provide any stop loss with our buy/sell sms?

get in which of the products below we do not provide any stop loss with our buy/sell sms? from screen.

What are stop loss orders and how to use them?

What are stop loss orders and how to use them?

What are stop loss orders and how to use them?

A stop-loss order is a buy/sell order placed to limit the losses when you fear that the prices may move against your trade. For instance, if you have bought a stock at Rs 100 and you want to limit the loss at 95, you can place an order in the system to sell the stock as soon as the stock comes to 95. Such an order is called 'Stop Loss', as you are placing it to stop a loss more than what you are ready to risk.

There are 2 types of Stop-Loss orders:

1. SL order (Stop-Loss Limit) = Price + Trigger Price 2. SL-M order (Stop-Loss Market) = Only Trigger Price Case 1 > if you have a buy position, then you will keep a sell SL Case 2 > if you have a sell position, then you will keep a buy SL In Case 1, if you have a buy position at 100 and you wish to place an SL at 95. a. SL-M order type - You will place a Sell SL-M order with trigger price = 95.

Here, when the price of 95 is triggered, a sell market order will be sent to the exchange and your position will be squared off at market price.

b. SL order type - You will place a Sell SL order with price and trigger price. Since your order needs to be triggered first, the (trigger price ≥ price.) Here, this order type gives you a range of the Stop-Loss.

Let's assume a range of Rs 0.10 (10 paise). Here, you can keep trigger price = 95 and price = 94.90.

When the price of 95 is triggered, the sell limit order is sent to the exchange and your order will be squared off at the next available bid above 94.90. So, your SL order may get executed at 95 (or higher) or 94.95 but not below 94.90.

The disadvantage of this order is that if the market falls steeply, then after 95 is triggered and before the Sell Limit order of 94.90 is sent to the exchange if the stock price is already below 94.90, then your Stop-Loss order will still be open and your losses could be much higher.

You will have to use your discretion whether to use SL or SL-M depending on the market scenario.

In Case 2, if you have a sell position at 100 and you wish to place an SL at 105. a. SL-M order type - You will place a Buy SL-M order with trigger price = 105.

Here, when the price of 105 is triggered, a buy market order will be sent to the exchange and your position will be squared off at market price.

b. SL order type - You will place a Buy SL order with price and trigger price. Since your order needs to be triggered first, (the trigger price ≤ price.) Here, this order type gives you a range of the stop-loss.

Let's assume a range of Rs.0.10 (10 paise). Here, you can keep trigger price = 105 and price = 105.10. When the price of 105 is triggered, the buy limit order is sent to the exchange and your order will be squared off at the next available offer below 105.10. So, your SL order may get executed at 105.05 or 105 but not above 105.10.

Alternate use of SL order:

Since Sell SL orders are used below your buy price and Buy SL orders are used above your sell price, you can use these order types to Buy above LTP (Last Traded Price) and Sell below LTP.

1. To buy above LTP, you can place a Buy SL order with the price at which you want to buy.

2. To sell below LTP, you can place a Sell SL order with the price at which you want to sell.

Here is the Kite Tutorial on Stoploss orders and here is the Kite User Manual .

Note

NSE has stopped supporting SL-M order type for options from Sep 27th 2021. To use Stoploss-limit(SL) order as Stoploss-Market(SLM) see How to use Stoploss-limit(SL) order like a Stoploss-Market(SLM) order?

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What is a Stop

Stop Loss order means the investor and broker have set an automated instruction if the price of a stock falls at a specific level to protect them from Loss and execute the sale of a security.

What Is A Stop Loss In Share Market?

Homeknowledge centerWhat Is A Stop Loss In Share Market?

TABLE OF CONTENT

What is a Stop-Loss Order?

Types of Stop-Loss Orders

Advantages and Disadvantages of Using a Stop-Loss Order

What Is A Stop Loss In Share Market?

Stop-Loss is one the most beneficial tool that helps investors from huge losses. While many investors are unfamiliar with these terms like stop loss or stop-loss order, it can serve as a lifesaver.

Some apply it well to prevent losses from their investing journey, while some avoid it due to insufficient knowledge on stop-loss.

Stop-loss, when used appropriately and correctly, will make a lot of difference in terms of investing. Every individual who is stepping into the stock market must know what stop-loss is all about.

What is a Stop-Loss Order?

Stop Loss order means the investor and broker have set an automated instruction if the price of a stock falls at a specific level to protect them from Loss and execute the sale of a security.

Stop Loss helps several investors manage all their losses by selling their bonds and stocks if there are chances of dropping below a certain level.

Let us understand the actual meaning of stop-loss with the help of an example:

Suppose Aman holds 1000 shares of Tata Motors, which he purchased for 200 per share, which means he has invested RS 2,00,000 in Tata Motors.

Due to any reason, if the price of these stocks started falling rapidly, Aman can use the stop-loss order with his broker. In such a situation, Aman will set RS 150 if the price drops in the future. Hence, there will be a loss of RS 50 per share on this transaction.

Types of Stop-Loss Orders

There are two types of stop-loss orders in the share market:

Fixed Stop-Loss OrderTrailing Stop-Loss OrderFixed Stop-Loss Order

Fixed stop-loss order means a sudden shock when an investor has set a pre-determined price, and it got hit. They can also be time-based, and these are commonly used till the trade is placed.

Time-based fixed stop are most beneficial for investors who want to stand at a pre-set amount of time before gaining profit and stepping towards the next trade.

These investors make use of time-based fixed stop when the shares are positioned and sized properly to stop high swings in share price.

Trailing Stop-Loss Order

Trailing stop-loss order provides net profit and protection to an investor while providing a boundary against the unexpected downward trend in the share price.

This order is set upon the percentage of the total price and the order to sell in case if the market falls below the demand level.

However, when the share price increases, the trailing order instantly adjusts in tune with an entire increase in market valuation.

Advantages and Disadvantages of Using a Stop-Loss Order

Advantages

Here are few advantages that every investor know while using the stop-loss concept:

1. Reducing losses

The primary benefit of a stop-loss order is it helps you to reduce all your losses and protects you against a huge loss in the stock market. Thus, there are times when several investors didn’t place a stop order when the prices were falling rapidly and turned out to be quite ugly.

Thus, placing a stop-loss order will help these investors from a big loss in the stock market.

2. Acts as an automation tool

Stop-loss order acts as an automation tool and automatically sells your stock as soon as the price falls below the set price. You don’t need to monitor your portfolio all the time, as stop loss will automatically hit once the stock touches the pre-determined price.

3. Helps to maintain risk and reward

While trading in the stock market, it is essential to maintain risk and reward. If an investor is looking to obtain a specific reward, they should only take a fixed amount of risk.

For example, they have to define that they will take 5%, 20%, or 50% for getting that much profit, and applying stop loss will help them to maintain their risk and reward.

4. Promotes Discipline

Investor should keep their emotions away while investing in the stock market. Stop-loss order will help them to stay motivated towards their financial planning and strategies and promotes disciplined trading.

Disadvantages

Apart from having advantages in stop-loss order, there are few disadvantages that every investor should know while using a stop-loss concept.

1. Short term fluctuations

The primary and major disadvantage of using stop-loss order is that when there are short-term fluctuations in a share price, it can get activated and adds risk to the investors.

One thing that every investor must remember while selecting a stop-loss order is that it should allow the stock to move and must provide less risk as possible.

2. Selling Stocks Too Early

The only risk involved in the stop-loss order tool is the risk of being stopped out of a trade that has the potential to give more profit if the investor has agreed to accept a bigger and higher level of risk.

Thus, stop loss close its deals too soon and limit the profit potential of an investor.

3. Investors Need to Decide The Stock Price

स्रोत : www.nirmalbang.com

Stop Loss Order: Advantages & Why You Should Use It

The stop-loss order is a simple but powerful investing tool. Find out how you can use it to help you implement your stock-investment strategy.

TRADING SKILLS TRADING ORDERS

The Stop-Loss Order—Make Sure You Use It

By THE INVESTOPEDIA TEAM Updated March 06, 2023

Reviewed by SOMER ANDERSON

Fact checked by MELODY KAZEL

With so many things to consider when deciding whether or not to buy a stock, it's easy to omit some important considerations. The stop-loss order may be one of those factors.

When used appropriately, a stop-loss order can make a world of a difference.

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And just about everybody can benefit from this tool.

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KEY TAKEAWAYS

Most investors can benefit from implementing a stop-loss order.

A stop-loss is designed to limit an investor's loss on a security position that makes an unfavorable move.

One key advantage of using a stop-loss order is you don't need to monitor your holdings daily.

A disadvantage is that a short-term price fluctuation could activate the stop and trigger an unnecessary sale.

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Stop Loss Order Strategy

What Is a Stop-Loss Order?

A stop-loss order is an order placed with a broker to buy or sell a specific stock once the stock reaches a certain price. A stop-loss is designed to limit an investor's loss on a security position. For example, setting a stop-loss order for 10% below the price at which you bought the stock will limit your loss to 10%. Suppose you just purchased Microsoft (MSFT) at $20 per share. Right after buying the stock, you enter a stop-loss order for $18. If the stock falls below $18, your shares will then be sold at the prevailing market price.

Stop-limit orders are similar to stop-loss orders. However, as their name states, there is a limit on the price at which they will execute. There are then two prices specified in a stop-limit order: the stop price, which will convert the order to a sell order, and the limit price. Instead of the order becoming a market order to sell, the sell order becomes a limit order that will only execute at the limit price (or better).

Advantages of the Stop-Loss Order

The most important benefit of a stop-loss order is that it costs nothing to implement. Your regular commission is charged only once the stop-loss price has been reached and the stock must be sold.

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One way to think of a stop-loss order is as a free insurance policy.

Additionally, when it comes to stop-loss orders, you don't have to monitor how a stock is performing daily. This convenience is especially handy when you are on vacation or in a situation that prevents you from watching your stocks for an extended period.

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Stop-loss orders also help insulate your decision-making from emotional influences. People tend to "fall in love" with stocks. For example, they may maintain the false belief that if they give a stock another chance, it will come around. In actuality, this delay may only cause losses to mount.

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No matter what type of investor you are, you should be able to easily identify why you own a stock. A value investor's criteria will be different from the criteria of a growth investor, which will be different from the criteria of an active trader. No matter what the strategy is, the strategy will only work if you stick to it. So, if you are a hardcore buy-and-hold investor, your stop-loss orders are next to useless.

At the end of the day, if you are going to be a successful investor, you have to be confident in your strategy. This means carrying through with your plan. The advantage of stop-loss orders is that they can help you stay on track and prevent your judgment from getting clouded with emotion.

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Finally, it's important to realize that stop-loss orders do not guarantee you'll make money in the stock market; you still have to make intelligent investment decisions. If you don't, you'll lose just as much money as you would without a stop-loss (only at a much slower rate.)

Stop-Loss Orders Are Also a Way to Lock In Profits

Stop-loss orders are traditionally thought of as a way to prevent losses. However, another use of this tool is to lock in profits. In this case, you can use a "trailing stop." The trailing stop can be designated in either points or percentages. The stop order then trails price as it moves up for sell orders, or down for buy orders.

Continuing with our Microsoft example from above, suppose you set a trailing stop order for 10% below the current price, and the stock skyrockets to $30 within a month. Your trailing-stop order would then lock in at $27 per share ($30 - (10% x $30) = $27). Because this is the worst price you would receive, even if the stock takes an unexpected dip, you won't be in the red. Of course, keep in mind the stop-loss order is still a market order—it simply stays dormant and is activated only when the trigger price is reached. So, the price your sale actually trades at may be slightly different than the specified trigger price.

Disadvantages of Stop-Loss Orders

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. Setting a 5% stop-loss order on a stock that has a history of fluctuating 10% or more in a week may not be the best strategy. You'll most likely just lose money on the commission generated from the execution of your stop-loss order.

स्रोत : www.investopedia.com