could someone explain the differences between the two,
Is a sell- limit order same as a selling stop-loss order in case if we have bought the stock
Nopes, they are not the same.
Assume you have bought a stock at Rs 100 and want to sell it at 105.
Sell limit order, you can place it at 105.
Selling Stop loss, if you place a selling stoploss with a trigger at 105, since the trigger price is above the market price, it will get triggered immediately and your SL will get executed.
so if you have bought a stock and want to sell it higher than the present market price, use a sell limit order and if you want to exit at a lower price than the current market price, use a selling stop-loss order.
Let me explain when both of these useful.
- If you have already bought the shares and you want to sell it above current market price, use a normal Sell Limit order.
- If you have already sold the shares (shorted), and want to buy at a price lesser than current market price,then use a normal Buy Limit Order.
- If you have already bought the shares and the current market price has risen safely higher, you are in profit zone, then if you fear the price may come down any time, safeguard your profits by setting a Stop Loss Sell order by setting the trigger price below few points of current market price.
- If you have already sold the shares (shorted) and the current market has dipped sufficiently and you are in profit zone, then set a stop loss Buy order with trigger few points above market price to safeguard your profits.
- If you are planning to buy the shares when the share price is suddenly shooting up, then place a Stop Loss Buy Order with stop loss trigger upfront, several points above the market price. If the market suddenly starts to bull rally, you will not miss the upward spike and buy the shares somewhere in the middle of the spike. Later on top of the spike, when spike settles, you can sell it with a normal Sell Order limit/market.
- If you are planning to sell the shares/short the shares when the market suddenly falls down, (profit booking shoots the price down) then place a Stop Loss Sell order with trigger several points below market price, When there is a sudden spike down, your order will execute in middle of spike or something so that you can buy those shares later when it settles in bottom.