Hi,
I am looking to see how to place an order which is way below the CMP and use it as a stop loss. Just to quote an example. CMP of nifty is around 6890. Assume as it opens today it goes and continues that trend. I place a sell order at say around 6800, which is far away from the current CMP, is it a possibility that it can get triggered although the market is hovering around 6900 levels. I need to keep this as a stop loss in order to safeguard a previous day position. Do I have to place a normal limit order or any other order type. Kindly let me know.
Vijay
If you place a normal limit order to sell at 6800 when Nifty is at 6900, it will get sold immediately at market price.
If you want to sell it only when Nifty reaches 6800, you need to use a selling SL order with trigger price at 6800. What this does is that until Nifty reaches 6800 or lower, the order is not active. As soon as the price hits trigger or goes lower a selling order is sent to the market.
You even get an option to choose what kind of selling order you want to send, limit or Market. If you want to send a market use SL-M otherwise use SL and mention a limit price.
So yeah, choose a selling SL-M with trigger at 6800, as soon as market goes to 6800, it will be sold at market price.
Check this post for more.
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Since market price is already high, you need to place a SL-M order at 6800 trigger. If prices comes down to 6800, then only your Sell Order will execute.