A stoploss order helps you control losses when the market moves against your trade. It automatically buys or sells a stock when the price reaches a level you decide in advance.
Example:
If you buy a stock at ₹100 and don’t want to lose more than ₹5, you can place a stoploss at ₹95. If the price falls to ₹95, your stock will be sold automatically. This protects you from bigger losses.
Types of Stoploss Orders
There are two types of stoploss orders:
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SL (Stoploss Limit)
You set two prices:-
Trigger price (when the order activates)
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Limit price (minimum or maximum price for execution)
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SL-M (Stoploss Market)
You set only one price:- Trigger price
Once triggered, the order executes at the current market price.
- Trigger price
Stoploss for Buy Positions (You Own the Stock)
Example: Bought at ₹100, stoploss at ₹95.
SL-M Order
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Set trigger price at ₹95
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When price hits ₹95, shares are sold at market price
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Execution is almost guaranteed
SL Order
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Set trigger price at ₹95 and limit price at ₹94.90
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Order will sell only at ₹94.90 or better
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If price falls sharply, order may not execute
Stoploss for Sell Positions (Short Selling)
Example: Sold at ₹100, stoploss at ₹105.
SL-M Order
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Set trigger at ₹105
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When price hits ₹105, shares are bought back at market price
SL Order
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Set trigger at ₹105 and limit price at ₹105.10
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Order executes only up to ₹105.10
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May not execute if price jumps fast
Other Uses of Stoploss Orders
Stoploss orders can also help you enter trades:
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Buy above current price using a Buy SL order
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Sell below current price using a Sell SL order
This is useful when you want to trade breakouts or breakdowns.