CNC Order with LIMIT Buy and LIMIT Sell (Stop Loss)


#1

Considering a person who has day job. He did his analysis on weekend then placed a Buy CNC Order for Monday. Now he wants to hedge his position buy putting his Stop Loss incase buy gets triggered.

Example
Current Share price -110
1] CNC - Buy Limit - 100 (quantity - 10)
2] CNC - Sell-Market - Trigger - 95 (quantity - 10)

Now before going to work i can place order Order 1 i.e. Buy but can’t place order 2 since i don’t have holdings. Hence a basic Buy with Stoploss order is not present. Is there any way to do this.

Secondly I would like to propose a solution, let me know if it would work. This is utilizing MIS.

Suppose to accomplish above what i do is that i use MIS Category.
I place following orders.
1] MIS - Buy Limit - 100 (quantity - 10)
2] MIS - Sell Limit - 95 (quantity - 10)

At 3:00 PM

  • if none of them get hit then i have no positions.
  • If Only Order 1 Gets Hit I have 10 position which i can convert to CNC (Provided i have margins) and now i can take delivery.
  • If Both order 1 & 2 Gets hit, did i successfully accomplish what i was trying above. Will Zerodha tread positions which got bought in order 1 to square of my sell positions in order 2. So by 3:00 P.M. I have same as no positions with total 5*10=50 Rs Loss.

I see this is the only way in which i can put orders and leave for work and then check once at 3:00 PM to see status.


#2

The problems you could face when executing this strategy is:

  1. You will need to maintain sufficient margins to keep 2 orders open at the same time.

  2. Not necessarily your buy order will get executed first. If, Your Sell order gets executed first and your 2nd Buy order will now act as stop loss.

  3. If you forget to convert to CNC and the stop loss has not been hit, ALL open Positions and Open MIS orders will be closed at 3.20pm.

Ideally , the whole thing makes it too stressful, with you having to keep checking the status of these orders (out of curiosity) throughout the day even while at work. Much easier and relaxing to set a Free Sentinel Price Alert and place a buy order when the price has reached your value area.


#3

Hi Prakash,
Replying to your points

  1. Consider Margins is not an issue, since i am not planning to use any extra leverage as i am not a day trader but forced to use day traders construct to get in a tight entry for my CNC order. Hence assume i have sufficient margins for both my buy and sell order at same time.

2.As i mentioned that i am not placing an AMO order but Regular order post market opens. Also i trade in stocks with sufficient liquidity that slippage doesn’t occur for my order amount. Since i trade after market open gap downs are not possible. If stops are sufficiently far apart More than 1Rs atleast i don’t see this happening in nifty 100 stocks.

  1. Agreed but in that case too i would be in profit but less. And certainly just checking once at 3:00 PM is simpler than acting on a sentinel alert while we are in a office meeting.

I felt approach of sentinel is more stressfull specifically when you are looking for tight entries with closer stop losses. With updated points let me know if you think that strategy would work as i am mainly concerned is that two orders as mentioned above can they act as my tight stop loss.

Thanks