I had set an after market stop loss market order on Jindal Steel at 266.5.
Today the market opened with a gap down at 265.45 below the stop loss trigger.
I would have expected the stop loss to get triggered and exit close to the market price, but instead the order was rejected. I had to exit the position manually at a loss.
I posted this problem to Zerodha support and below is their reply:
We would like to inform that the order you have placed an AMO that order as been sent to the exchange at 9.15 Am that time the last traded price was 264.85 Rs and the stop loss order placed at 266.50 Rs the invalid trigger price encountered due to that the order got rejected.
This logic of rejecting the order, leaves you exposed to big losses and defeats the purpose of a stop loss order.
Why not instead,
Check the validity of the SL-M order against the pre-open market price before submitting to the exchanges.
If SL-M order is invalid due to trigger price > open price, modify the order as a market sell order to automatically exit the position.
I’m not complaining, just curious.