I am bit confused about the role of Stop Loss GTT Triger Price and Limit Price. Below is my understanding , kindly correct me if wrong.
lets say I have the shares in my Demat a/c bought at 200.
Sell Stop loss order:
Trigger Price: 185
Limit Price: 184
With above GTT, my understanding is when cmp hits 185 my order will be triggered and go to exchange and order will be executed when cmp hits 184.
Is there any chance that order will be executed for price less or more than 184?
The limit order works like this: it aims to match or execute at or better than the specified price, depending on availability of buyers / sellers at Exchange.
For sell order, the higher the price, the better.
If the LTP breaches trigger price of 185, GTT order triggers, sending a sell limit order with a price of 184 to the Exchange.
It will only be executed at or above 184, otherwise it won’t be executed if there are no buyers available.
Thanks for the response!
so in case of target sell GTT example:
Trigger price: 218
Limit price : 220 (so as per your explanation order will be executed for LTP 220 or more (this would a good deal for me as i was intending to sell at 220), can this also be executed at 219 in case LTP reduces?)
In case of Stop Loss Sell GTT example:
Trigger Price: 190
Limit Price :185 (as per your explanation order will get executed for 185, 186,187 etc. am i right?
It won’t sell for LTP less than 185?
The problem in setting sell limit price (220) higher than trigger price (218) is that order won’t be executed instantly after GTT is triggered until LTP touches 220 or above (i.e. executed only if there’s buyers available at or above 220).
You got it right. It will be executed at available market price up to the protection limit price of 185 (after trigger price of 190 is breached)
The sell limit price should always be lower than trigger price for immediate execution post trigger.
Thanks so much for clarification.
I don’t have experience in GTT order. Do you think GTT order with decimal in price works well or its advisable to put order on whole numbers?
For sell order, the higher the price, the better. (could you please elaborate this for Stop loss and target sell orders?)
Yes GTT with decimal works (in both trigger price and order price). However, I think it will be better to do it additives of 0.05 only (Put for 184.85 or 184.8, not for 184.83 or 184.99).
It means if CMP is 185, trigger is 185, and your sell order is 183, the exchange can sell it at 183 itself. They will try to sell it to people who are bidding 183-184.95. So even though current market price is 185, you would have sold for less. If you had put 184 instead of 183 as sell price, you would have sold between 184 and 184.95.
So put sell price as just a bit lower, not absurdly low (Eg: Do not put sell price 182 for trigger price 185)
If your stop loss is 185 and target is 200, put like the following (just for example)
Stop loss trigger = 185
Stop loss sell price = 184.85 (This means you will sell between 184.85 and 185)
Target trigger = 200
Target sell price = 199.9 (This means you will sell to people between 199.9 and 200)
This means it will very easily get fulfilled.
Target trigger = 200
Target sell price = 199.9 (This means you will sell to people between 199.9 and 200)
I was in assumption that For target GTT sell price should be higher than trigger. for ex:
Trigger: 199
sell price: 200
could you please share your thought behind keeping trigger:200 and sell price:199.9 ? (in this case if trigger happens at 200 and price do not come back to 199.9 then order will be in pending right?)
It depends on the price you want to sell. If you want to sell at 200, trigger must be 200 or more. That means, when it is triggered, your sell order price will be at 200. That would get fulfilled immediately since price is >= 200 and you are selling at 200.
If you sell at 200 by placing a trigger at 199, it might go unfulfilled because price might never even reach 200.
If CMP is 200, and your sell price is 199.9, it will never be pending. You can always sell below market value. The exchange will match your 199.9 sell request to everyone who is paying 199.9, 199.95, 200 and so on.
If you are confused, just keep this in mind. Sell price must be a tiny bit less than trigger price (just a small bit like 0.15-0.2% lower). This is for both target price trigger and stop loss trigger. This will help you sell immediately and not let order be pending.