Stop Loss Order

Stop Loss order is an attribute attached to a buy or sell order, so that the order gets executed as a market order, only after the price has reached a specific trigger price.

After you create your 'Trading Action Plan', based on your own technical or fundamental research, next step you are going to take is, placing your order with your broker. Before you can start buying and selling stocks, you must know the different types of orders. You must be aware as to which order is appropriate and its implications.

What is a Stop Loss Order?

Order on stop is a conditional request made to the broker (or the system) to execute the transactions with the immediate best available price, once the price crosses a predetermined trigger price.

They are so called because, they are typically entered after a position is created, to stop the loss to a minimum, if the trade goes against you.

When to use a Stop Loss Order?

When you are having a long position, a sell stop order is placed. Here a trigger price is specified below the purchased price, which when touched, a market sell order is released to the system to square off the position.

Similarly, When you are having a short position, a buy stop order is placed. Here a trigger price is specified above the sold price, which when touched, a market buy order is released to the system to square off the position.

These orders are also best used, to buy a stock above the resistance or to sell a stock below the support, when they are breached.

Compare Stop Loss Order with other type of orders:

  • All or None Order
  • It is a conditional request made to the broker (or the system) to buy or sell a required number of shares at particular price, only if full quantity of shares are available.
  • GTC Order
  • It is a conditional request made to the broker (or the system) to keep the order in system until it gets executed or canceled.
  • GTD Order
  • It is a conditional request made to the broker (or the system) to keep the order in system until it gets executed or till a predetermined date.
  • IOC Order
  • Immediate or Cancel is a conditional request made to the broker (or the system) to execute the transactions immediately or to cancel it.
  • Limit Order
  • Limit Trading Order is a conditional request made to the broker (or the system) to buy or sell a stock at a particular price or at a better price.
  • Market Order
  • Order to buy or sell at market is a conditional request made to the broker (or the system) to execute the transactions with the immediate best available price.
  • Stop Limit Order
  • Order at stop limit is a conditional request made to the broker (or the system) to execute the transactions with the immediate best available price, once the price crosses a predetermined trigger price but with in a predetermined limit price.
  • Minimum Fill Order
  • This is a conditional request made to the broker (or the system) to execute the transactions only when a minimum number of shares are available.
  • One Cancels Other Order
  • This is a conditional request made to the broker (or the system) to execute one of the two orders, which ever meets the required parameter first, and cancel the other.
  • Market on Close Order
  • This is a conditional request made to the broker (or the system) to buy or sell a stock at the closing price.
  • Limit on Close Order
  • This is a conditional request made to the broker (or the system) to buy or sell a stock at the closing price but with in a limit price.
  • Market on Open Order
  • This is a conditional request made to the broker (or the system) to buy or sell a stock at what ever the market opening price.
  • Limit on Open Order
  • This is a conditional request made to the broker (or the system) to buy or sell a stock at what ever the market opening price but with in a predetermined limit price.
  • Market If Touched Order
  • This is a conditional request made to the broker (or the system) to buy or sell a stock at what ever the market price only after the stock trades at particular predetermined price.
  • Iceberg Order
  • This is a conditional request made to the broker (or the system) to buy or sell a large required quantity of stock, but in smaller predetermined quantity.
  • Fill or Kill Order
  • This is a conditional request made to the broker (or the system) to execute the transactions only if the full quantity of shares are available, or else to cancel the order.





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