How to use Stoploss-limit(SL) order like a Stoploss-Market(SLM) order? (2024)

FAQs

How to use Stoploss-limit(SL) order like a Stoploss-Market(SLM) order? ›

Similar to using a limit order as a market order, the SL - L (stop loss limit) order can also be used as an SL-M (stop loss market) order. To do this, a limit price needs to be provided, which is higher or lower than the trigger price, depending on whether the intention is to buy or sell.

When an order has been placed to buy or sell a stock the order is only executed when the stock reaches or crosses a specified price point also known as the 'SL Trigger Price'. There are 2 types of Stop-Loss orders: SL order (Stop-Loss Limit) = Price + Trigger Price. SL-M order (Stop-Loss Market) = Only Trigger Price.

Such an order is known as 'Stoploss' as it aims to prevent a loss exceeding the predetermined risk. There are two types of stoploss orders: SL order (Stoploss Limit) = Price + Trigger price. SL-M order (Stoploss Market) = Only trigger price.

“Sell stop” to open a short position at a price lower than the current price. “Buy Limit” to open a long position at a price lower than the current price. “Sell Limit” to open a short position at a price higher than the current price.

Overall, stop-loss orders can be a useful tool for managing risk, but they should be used with caution and in conjunction with other risk-management strategies. If investors and traders are more sensitive to price, as opposed to execution speed, they can also consider a stop-limit order, instead of a stop-loss order.

Similar to using a limit order as a market order, the SL - L (stop loss limit) order can also be used as an SL-M (stop loss market) order. To do this, a limit price needs to be provided, which is higher or lower than the trigger price, depending on whether the intention is to buy or sell.

What stop-loss percentage should I use? According to research, the most effective stop-loss levels for maximizing returns while limiting losses are between 15% and 20%.

There are two types of stop-loss orders: one to protect long positions (sell-stop order), and one to limit losses on short positions (buy-stop order).

For a majority of retail traders, the stop market is the go-to stop loss order. It combines the functionality of both the market and stop-limit order types, ensuring a speedy exit upon a specific price point being hit. Like the stop limit, the stop market rests at market until price hits the predetermined level.

A limit order tells your broker to buy or sell an asset at an indicated limit price or better. A stop order initiates a market order, which tells your broker to buy or sell at the best available market price once the order is processed.

Can you have a sell limit and sell stop at the same time? ›

Stop orders may also be used to enter the market on a breakout. One very common method of trading is to enter the market on a limit order and place a protective stop at the same time to help manage risk by having a predefined risk parameter.

Traders face certain risks in using stop-losses. For starters, market makers are keenly aware of any stop-losses you place with your broker and can force a whipsaw in the price, thereby bumping you out of your position, and then running the price right back up again.

Disadvantages. The main disadvantage of using stop loss is that it can get activated by short-term fluctuations in stock price. Remember the key point that while choosing a stop loss is that it should allow the stock to fluctuate day-to-day while preventing the downside risk as much as possible.

Both types of orders are used to mitigate risk against potential losses on existing positions or to capture profits on swing trading. While stop-loss orders guarantee execution if the position hits a certain price, stop-limit orders build in the limit price the order gets filled at.

One of the main reasons professional traders don't use hard stop losses is because they use mental stops instead. The advantage of this is that you don't have to 'give away' where your stop loss is by placing it in the market.

The Bottom Line. Investors can use two common types of orders to buy or sell stocks: market orders and limit orders. Market orders often execute right away at whatever price the market is charging. Limit orders won't trigger until the market price meets whatever price the investor is looking for.

A market order is an instruction to buy or sell a security immediately at the current price. A limit order is an instruction to buy or sell only at a price specified by the investor.

The stop-loss is used to limit losses when prices are falling. An order specifying a price at which an investor is willing to buy or sell a security is a limit order, while a market order directs the broker to buy or sell at whatever price is available in the market.

Stop-Loss Limit Order:

A stop-loss limit order is executed at the price you set. The stop-loss serves as a trigger for the order. For example, if you hold a buy position at ₹100 and want to limit losses in a falling market, you can place a sell stop-loss limit order with a trigger price of ₹96 and a limit price of ₹95.