ICICIdirect: stop loss in delivery based buying

[udaysehgal]

In ICICIdirect, while placing a limit order to buy shares in the cash segment, a box for mentioning the stop loss price also appears. Is it mandatory to mention a stop loss price here?

If yes, why? What is the logic behind that? Also, in that case, on what basis do I fix the stop loss price in such order?

I intend to buy and hold for long term.

Also, in the help section of ICICIdirect, a note is attached to the explanation for stop loss order: “Please note that in a buy order the SLTP (stop loss trigger price) cannot be less than the last traded price. This is treated as a normal order because the condition that the last traded price should exceed the stop loss trigger price for a buy order is already satisfied. Similary, in case of a stop loss sell order the SLTP should not be greater than the last traded price for the same reason.”
What does this mean for me?

 

[sagarkapoor]

Is it mandatory to mention a stop loss price here?

No it is not mandatory to mention a stop loss price in the box provided.

I intend to buy and hold for long term.

I think you do not need to fret over Stop Loss as you are planning to hold for long term. Although you can use it in Intra-day very well.

Also, in the help section of ICICIdirect, a note is attached to the explanation for stop loss order: “Please note that in a buy order the SLTP (stop loss trigger price) cannot be less than the last traded price. This is treated as a normal order because the condition that the last traded price should exceed the stop loss trigger price for a buy order is already satisfied. Similary, in case of a stop loss sell order the SLTP should not be greater than the last traded price for the same reason.”
What does this mean for me?

Hmm... I'll try to explain this with an example ... seniors request you to please correct me if I'm wrong ...
See Stop Loss by itself means you are stopping your losses so here it goes ...
(The situation and figures mentioned below are hypothetical)
Say I think that L&T stock will fall today so I can short sell those shares (selling shares which I do not own) so I sell these shares at say 300 per share.
Now I cannot possibly sit and monitor the share price the whole time so what I say to ICICIdirect is place a BUY order for L&T now (since I sold shares I do not own, I need to buy them back as well in the same settlement), I say that 305 is my STOP LOSS meaning that if this price of L&T is HIT, ICICIdirect should now convert my stop loss order into a normal limit order or market order as chosen by you. So what I am essentially doing is telling ICICIdirect that till the price is below 305 don't do anything but as soon as 305 is HIT process my order i.e send a BUY order from my side to the exchange.

Now you'd say this is BS i'll just place a limit order and get it done with ... well yea a limit order could be placed but a Stop Loss does not process the order till your Stop Loss is HIT and then only it creates a BUY transaction for your order.

The feature of Stop Loss is that it prevents running of losses in Intra-day trading and also you could use it to maximize your profits by lowering your SL according to the price.

The same is for a BUY order in which you place a SELL order for a value lesser than what you bought for.

I hope this clears your doubt to some extent. Please seniors correct me if i'm wrong.

 

[Flock]

Login to icicidirect and click the help link on the trading page. It will give you all the details.

Demos are also available.

 

[udaysehgal]

Thanks Sagar for your excellent and comprehensive response.

Thanks to Traderji as well...this forum just saved me a lot of time -- very convenient!

No it is not mandatory to mention a stop loss price in the box provided.



I think you do not need to fret over Stop Loss as you are planning to hold for long term. Although you can use it in Intra-day very well.



Hmm... I'll try to explain this with an example ... seniors request you to please correct me if I'm wrong ...
See Stop Loss by itself means you are stopping your losses so here it goes ...
(The situation and figures mentioned below are hypothetical)
Say I think that L&T stock will fall today so I can short sell those shares (selling shares which I do not own) so I sell these shares at say 300 per share.
Now I cannot possibly sit and monitor the share price the whole time so what I say to ICICIdirect is place a BUY order for L&T now (since I sold shares I do not own, I need to buy them back as well in the same settlement), I say that 305 is my STOP LOSS meaning that if this price of L&T is HIT, ICICIdirect should now convert my stop loss order into a normal limit order or market order as chosen by you. So what I am essentially doing is telling ICICIdirect that till the price is below 305 don't do anything but as soon as 305 is HIT process my order i.e send a BUY order from my side to the exchange.

Now you'd say this is BS i'll just place a limit order and get it done with ... well yea a limit order could be placed but a Stop Loss does not process the order till your Stop Loss is HIT and then only it creates a BUY transaction for your order.

The feature of Stop Loss is that it prevents running of losses in Intra-day trading and also you could use it to maximize your profits by lowering your SL according to the price.

The same is for a BUY order in which you place a SELL order for a value lesser than what you bought for.

I hope this clears your doubt to some extent. Please seniors correct me if i'm wrong.

 

[NOMINDTR]

Ah! SagarKapoor made it right.

 

[pakatil]

Just a small addendum.

Stop Loss Order does not necessarily mean restricting losses of our open positions.

Buying above the LTP or Selling below the LTP, it is termed as Stop Loss Order.

Buying below the LTP or Selling above the LTP, it is termed as Limit Order.

Even without having any open positions, i may like to buy RIL at 1350 when LTP is 1300. So I put a Stop Loss Order, with Limit at 1351 and SL Trigger at 1350.

Cheers

 

[ManojChouhan]

Thanks Mr. Sagar for explaining

 

[hbkhrushikesh]

Hey All,
Thanks all for the explanations....!!!

just one more Q.... if i buy a stock, and want to change the stop loss value...... how can I do that???

Eg: i buy a share at Rs 100 with a stop loss of Rs 85. After some-time, the price of the share goes up to Rs 130. I now want to protect my profits at this new price and want to move the stop loss to Rs 110. This way I wud make sure that I make money on my original transaction irrespective of a crash in price in future.

Can someone advice me on if i can do that? and how?

thanks rishi

 

[munde_77]

Hey All,
Thanks all for the explanations....!!!

just one more Q.... if i buy a stock, and want to change the stop loss value...... how can I do that???

Eg: i buy a share at Rs 100 with a stop loss of Rs 85. After some-time, the price of the share goes up to Rs 130. I now want to protect my profits at this new price and want to move the stop loss to Rs 110. This way I wud make sure that I make money on my original transaction irrespective of a crash in price in future.

Can someone advice me on if i can do that? and how?

thanks rishi

you can modify stop loss

 

[hbkhrushikesh]

How?
My broker is ICICI. I dont see any link where I can modify the stoploss!! All I know is the stop-loss on the page when one buys equity. I have scanned through the ICICI site. I am not able to find any option where in I could modify my stop loss.

I had bought tata shares at 137 had a stop loss of 120..... the shares rose to 177....... wanted to modify the stop loss at that point to 165...to prevent losses if the share falls ( actually was thinkin abt freezing some profits!!!) but couldnt find it....... and as i am not a full time trader... by this friday, b4 i realised.... the price had dropped to 165