Does a stop-loss mean I cannot lose more than what I entered?

General
1

Suppose I do the following

  • Buy XYZ at Rs. 10000
  • I set Sell Price at Rs. 11000 and set Stop-loss at Rs. 9000

In the next price change, if the price is Rs. 8000, my stop-loss will be triggered. In this case, will I lose Rs. 1000 or Rs. 2000?

There seems to be some misconceptions about stop-loss so I'm trying to clarify what the correct information is.

2

hElLO tRaDeR,

Your understanding of Placing STOP LOSS is correct.

There are two types of Stop Loss Orders:

1) Stop Loss Market Order:

The stoploss order gets triggered as price touches or crosses 9000 and gets filled at the best price that is currently available in the market at the time of trigger.

a) At 9000 if a buyer is available or

b) At 8000 if someone is ready to buy it off you only at 8000.

2) Stop Loss Limit Order:

The stop loss order gets triggered as price touches or crosses 9000 and gets filled only at the limit price you have set on the order.

If you have set the LIMIT price at 8999 the order will wait on the exchange server till someone is ready to buy it off you at 8999.

Placing STOP LOSS LIMIT orders makes sure that your orders are filled only at the limit price you have set. The order waits till it finds a buyer at your price.