How do you place SL and SL-M orders?

[rainbow99984]

Hi, New to stocks and confused, watched the video of stop loss order provided by zerodha and read the answers but not so clear to me.

My question is not about need of stop loss, but why we need a order type of stop loss and my understanding of stop loss and trigger in cnc type of orders in equity.

Please correct where my understanding is wrong.

what I understand is “The order specifies that an investor wants to execute a trade for a given stock, but only if a specified price level is reached during trading.” ie

we fix trigger price, if it hits, the order goes to market.

1. In case of sell we place trigger price at lower rate(? can it be higher) than the CMP and sell on either our limit (sl) price which is lower than the trigger price or on market price (sl-m) to stop more loss. assuming I already own the stock.
   Can trigger be reversed,ie sell if it goes above certain price?
2. In case of buy the trigger price is higher than cmp (is to test the market strength ? can it be set to lower price?) and set the limit price (sl) at higher rate then trigger price(?). or on market rate (sl-m).
   Can it be reversed,ie buy only if it goes down to certain price?
   3 why not directly place orders on the rate we originally thought of on sell/buy orders why we need a trigger price?

Thanks.

[BharatW]

Hello,

Please keep aside everything you know and look at a Stop-Loss(SL) order as just any other order.

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 a 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 for the Stop-Loss.

Lets assume a range of Rs.0.10(10 paisa). 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 whatever is the market price between 94.90 and 95, your order will be squared off at that price.

* 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 a 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 for the Stop-Loss.

Lets assume a range of Rs.0.10(10 paisa). 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 whatever is the market price between 105 and 105.10, your order will be squared off at that price.

Alternate use of SL order:

Since Sell SL orders are used above your buy price and Buy SL orders are used below 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.

Cheers!

[rainbow99984]

Thanks, This scenario seems to be in MIS / options and futures? or it is in CNC order with equity. too ( totally noob here). ie delivery based trading. If you can please check my points 1,2 and 3 and comment on them if my understanding is correct or where I’m wrong.
Thank you!

[BharatW]

SL and SL-M orders are the same for CNC, MIS and NRML . It is used the same way as mentioned above for Equity, Futures and Options.
Only that in the case of options, one can place only SL orders and not SL-M orders since SL-M is blocked for stock options due to illiquidity.

[girishmathur]

I am also a new comer. Please answer below point

I have purchased JINDALSTEL @ Avg Cost 119.55 and wanted to sell it as soon as it reaches 125.00 (currently its in 122.60)

What options should i select from “Holding” section for Exit?

[VIPULK]

Put limit order of 125 in sell… That shud sell ur holding if prices touches 125 or more… All d best

[girishmathur]

Thanks, and if also i want to sell if Avg Cost comes down to 118 which option should i use?

[VIPULK]

That’s explained by Bharatw abv… Put either sl m or sl l as 118 in sell order. Sl l may not execute ur trade in case price breaks from 118.05 to 117.9.
Sl m will execute ur sell trade at 117.9 in this case…Hope clr

[girishmathur]

Yes that’s clear. And I hope same thing SL-M I can even use for if I want to stop loss at 124.00

But when I did as suggested by you it was rejected, see screen shot. Do you have any idea why? Status says adapter not ready.

[lindo]

Hi there,

All orders that are placed on Zerodha are valid for a day only. Since the market is closed and you are trying to place a regular order on CNC the order gets rejected quoting the above error.

[girishmathur]

Does that mean limit order that are placed is also for a day and next day I have to set it again?

[ganesh07]

I am new in trading,
my question is that how do orders get match ?
eg. If i have 100 Shares of abc ltd.(intraday) And i want to place stop loss to sell at 125. If i did it for intraday how this sell matched to my previous buyed shares.(because in intraday we have option to do fresh short positions), does system may think that he want to short new 100 Shares ( Like hedge style).

[PR1743]

Yes…read that GTC orders will come to Zerodha…till then it’s the only way

[ganesh07]

nice explanations!!
could you please give information about CO & BO with nice example.

[PR1743]

@ganesh07 go to z-connect blog and zerodhaonline YouTube channel…there is a wealth of information there

[SindhuGururaj]

Hi,
I am used to only vanilla buy n sell and have not done SL/SLM et el. Kindly guide. I did read the article, but still feeling confused about this.

Intraday

1. MIS Order type

2. Say CMP of SAIL is 51 and I place a limit order and purchase X shares of SAIL.

3. I want to place a SL for this purchase at 48

4. Want to sell it at 54

I first did a limit CNC order for X Sail shares. I understand that I wanted to do intraday and should choose MIS, but I was ready to hold it positionally too in case the trade goes in my favour hence placed it as CNC

I then placed a SL-M with trigger at 48. This happened successfully.

I was then not able to place a limit SELL order at 54 & the order was rejected.

Why did the SELL limit order at 54/- get rejected?

How do I place the order like above? Bought SAIL as CNC or MIS, SL at 48/- but sell at 54?

I cancelled my SL-M at 48/- then I was able to place a simple limit sell order at 54/-!!

I want it as SL at 48/-, sell it if reaches 54/- carry the trade for a BTST if the trade goes in my direction.

Using KITE web on Mac Book and iPhone.

Please note, I have already read the article on stop loss orders and how to use them and yet feel confused and hence raising the ticket.

Kindly help with the execution step in Kite web to do the above.