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What is the trigger price in a stop loss order? November 08 2021Investment Guide for Beginners

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What is the trigger price in a stop loss order?

Stock market has an unpredictable and volatile nature due to which a lot of investors and traders hesitate to invest their hard earned money. Stop Loss Trigger Price (SLTP) plays a major role in countering high market volatility and losses and assists the market participants to invest and trade freely without hesitation.

What is Trigger Price?

The price at which your buy or sell order becomes active for execution on the exchange is known as the trigger price. In other words, the order is delivered to the exchange servers whenever the stock price reaches the trigger price you selected.

What is Stop Loss Trigger Price?

The Stop Loss Trigger Price (SLTP) is a price entered when a stop-loss order is placed. The stop-loss order is triggered and forwarded to the exchange for execution when the security's price hits the SLTP price.

A stop-loss (SL) order is a kind of advance order that is intended to restrict a position's loss. Until the SLTP is met, an SL order stays active. The order is activated and placed on the exchange whenever the price hits the SLTP.

It's important to note that the SLTP is not the price at which the order is placed. The limit price is used to execute the order. When the share price reaches the trigger price, the order is triggered and submitted to the exchange.

Also read -  What Is Target Price And Stop Loss?

Example:

You purchase 1 share for Rs 525, anticipating a price increase in the following days. However, you're also anxious about the possibility of prices going low. In this case, you can use a stop-loss order to minimize your losses if the prices fall. You must enter an SLTP (Stop loss trigger price) and a limit price while placing the SL order. Assume you have a Rs 510 SLTP and a Rs 500 limit pricing. When the share price hits Rs 510, your order will be executed and delivered to the exchange. When the exchange finds a buyer at a limit price of Rs 500, the SL order is executed. This protects you against future losses if the stock falls further, thereby limiting your loss.

This is the most easiest and beneficial way to minimize your losses when a share prices fall even below the anticipated price. 

Open demat account with Indira Securities and start your trading journey with the best full-service providing brokerage firm in Central India.

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Prevent Unauthorized Transactions in your demat and trading account --> Update your Mobile Number/Email id with your Depository Participant and Stock Broker. Receive alerts on your Registered Mobile for all debit and other important transactions in your demat/trading account directly from CDSL and Stock Exchanges on the same day.........issued in the interest of investors...

1. Stock Brokers can accept securities as margin from clients only by way of pledge in the depository system w.e.f. September 1, 2020.

2. Update your Mobile Number & Email Id with your Stock Broker/ Depository Participant and receive OTP directly from Depository on your Email Id and/ or Mobile Number to create pledge.

3. Pay 20% upfront margin of the transaction value to trade in cash market segment.

4. Investors may please refer to the Exchange's Frequently Asked Questions (FAQs) issued by NSE vide. Circular No. NSE/INSP/45191 dated: July 31, 2020 and NSE/INSP/45534 and BSE vide Notice No. 20200731-7, dated: July 31, 2020 and 20200831- 45 dated: August 31, 2020 and dated: August 31, 2020 and other guidelines issued from time to time in this regard.

5. Check your Securities/ MF/ Bonds in the Consolidated Account Statement issued by NSDL/ CDSL every month.

"As per the directives of CDSL and esteemed Exchanges, it has been made mandatory for every client to furnish their latest KYC details viz. Valid Mobile No., Email- Id & Income range on or before 31.05.2021 else your Account will be marked as Non Compliant and will be Freezed till the compliance of such requirement."
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