hElLO tRaDeR,
Once you place a stop loss order on your trading terminal, the order is passed on to the exchange and wait idle on the exchange servers.
Trigger price is the price at which this idle order becomes active.
Price is the value at which your order gets filled.
Hello,
If you buy a stock at 100 and intend to keep a SL-Limit(SL) order at 95, then here you have to enter a price and a trigger price. Since this is a Sell SL order, the trigger price will be higher than the price value.
So if you place a Sell SL order with trigger at 95 and price at 94.80, then once the trigger of 95 is hit, your order will get executed between 94.80 - 95. It can get executed at 94.80, 94.85, 94.90, 94.95 or 95. This price will be determined by the next available trading bid price when your trigger gets executed and your Sell SL order is up for execution.
Sometimes, when there is a sharp movement, SL-Limit orders don't do its job. Say the same stock falls from 96 to 93, then your SL order will still remain open if your trigger of 95 is hit and the stock falls below 94.80 before your SL order lines up in the order queue. Here, you are bound to lose more if the stock continues to fall.
SL-Market(SL-M) orders eliminate this risk by having only a trigger price. Here, assuming the same trigger of 95, when the trigger price is hit, the SL-M order will get executed at whatever is the next available market bid price when your order is ready for execution.
One has to choose between SL and SL-M orders depending on volatility. Placing a SL order with a higher range between Price and Trigger price is a good alternative to SL-M orders.
Hope this helps. Cheers!