Some stock market stuff!
I trade using ICICI Direct. I trade for having a safe future (yup with all the risks involved, still I want to believe indian stock market will help me have a safe future) and to increase my knowledge about stock market. I had tried to understand what is meant by Stop Loss Trigger Price but had been unable to do so till I burned my hand and then learnt it.
I had bought 94 stocks of OnMobile for 440. When it listed yesterday, I wanted to sell 30 stocks if the price touched 439. With this intent, I decided to put my Sell Order. At the time of placing my order, OnMobile was trading for around 455. As I did not know what Stop Loss Trigger Price is, I left the field as empty.
The intent was right, but the execution wrong. This order was interpreted an a sell immediately at whatever was the market price and my stocks were sold at 453 which was the market price when the order was accepted.
I learnt from this and this is the right way to do it.
After putting the limit price, I entered the Stop Loss Trigger Price as 445. Now the intention as well as execution were both right. The order was interpreted as "Turn this order into a market order as soon as stock price touches 445" As long as the stock price was more than 445, this order was a passive order. It was turned into an Active order only when the stock price touched 445.
All said and done, I am still unable to understand whats the use of limit price when I put a Stop Loss Trigger Price. The reason I ask this question is because in the above example even though I specify a Limit Price of 439, the stock would be sold if the value of the stock touches 445. So why enter the Limit Price! Maybe I will learn it again with another mistake. As they say, Learn from other peoples mistakes because your life is too short to make all the mistakes. So if anyone knows the answer to my question, please send me the answer before I make a mistake.
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