when we select BO in zerodha kite and chose SL option, there are two fields named “trigger price” and “stop loss”. i understand the concept of a stop loss, but i am confused as to what is the meaning of “trigger price” and we are already providing a “target” and stop loss?
for eg, if i place a BO with the following:
Qty: 1
price: 100
trigger price: 95
stop loss: 2
target: 10
trailing stoploss: 1
now as soon as the price hits 95, the SL order is sent to the exchange. then what happens? how and at what price is the order executed?
also, if we chose CO, in SL, there is only input for “trigger price” and no “stop loss”. i am really confused by this, i have read that “trigger price” is the stop loss in covered order, then what is the difference between “trigger price” and “stop Loss”?
The purpose of the BO - SL order is to provide an option to buy at a higher than market price or sell at a lower than the market price on intraday.
For example, let’s say XYZ stock is trading at Rs. 100 and you want to buy 50 shares on intraday if the price goes above Rs. 102. You can place a buy BO - SL order with the following details:
Qty: 50
Price: 102
Trigger Price: 102
Stop Loss: 5 (5 points from 102 will be the stop loss)
Target: 10 (10 points from 102 will be the target)
The first leg of the order (buy order) will remain open till the stock price reaches 102. Once the trigger of 102 is hit, the order gets executed in the range between the trigger price and price. In this case, as the range is 0 the order goes through at 102 itself, if there’s a counter order in the market at 102. Else the buy order will remain open at 102. Once the first leg is executed, your stop loss order at 97 (102-5) and target order at 112 (102+10) will be opened.
You can go through this link to know when and how the BO - SL order is used.