Please review my knowledge of stop loss , limit , trigger price

[raj333]

Hello All

I am very new to trading and don't know many advanced concept. I read about limit price and stop loss on internet (because i know nobody who could explain me in person). i am writing what i understood about it..please tell me if i am wrong or right..many many thanks in advance

CASE 1--buying--- if current CMP is 100 and i set trigger price 99 and limit price 98 for buying

it means that as soon as price falls to 99 , my order would be put and as soon as it reaches 98 or below , it would be executed.

CASE 2---for buying -- if current CMP is 100 and i set trigger price 101 and limit price 102..so as soon as price reaches 101 my order would be put and executed somewhere between 101 and 102 (if there is enough liquidity in market and price don't change abruptly)..i.e it would be bought at a price less than 102 ..but it can be 101 or 100 or 99 ....but order would only be put when the CMP as atleast touched 101 even though for a small time.

CASE 3---for selling ---if current market price is 100 and i set trigger price as 99 and limit price as 98 ..so it would sell my shares at a price greater than 98...it can be anything like 98, 99 ,100 depends upon how fast market changes..but only be triggered only and only if the price touched 99 even for a while.


CASE 4 --- for selling--- if CMP is 100 and trigger price is 101 and limit is 102...then as soon as price touches 101, order would be put and as soon as price crosses 102..my order would start executing,.. ALL the orders would be executed at a higher price than 102.




AM I WRONG?
please make me clear if i made some mistake or my understanding is wrong...

THANK YOU

 

[boarders]

2 and 3 correct
1 and 4 wrong

 

[boarders]

case 2 it will execute between 101 and 102
case 3 will execute between 99 and 98

case 1 and 4 are wrong so order will be rejected while placing

 

[raj333]

Thank you !

Can you please tell me how would i execute CASE 1 and CASE 4 .

i mean what should be my trigger price and limit if i want to execute my order in CASE 1 & 4 style.

thank you

 

[raj333]

i read here


http://www.interactivebrokers.com/en/trading/orders/stopLimit.php?ib_entity=llc

http://www.interactivebrokers.com/en/trading/orders/lit.php?ib_entity=llc

 

[escape]

Here are correct way for Case 1 and Case 2:

Case 1: Assume CMP is Rs 100, and you are looking for BUY
1a) If you want to Buy only if it reaches above 101 and maximum rate you are willing to pay is 102, then set trigger as 101, and limit as 102. Once CMP touches 101, your order will be triggered and will be executed at 102 or less.

1b) If you want to buy only at Rs 98, just place limit order for Rs 98. No trigger is required.

Case 2: Assuming CMP is Rs 100, and you are looking for SELL

2a) If you want to SELL only if it reaches below 99 and lower rate you are willing to sell 98, then set trigger as 99, and limit as 98. Once CMP touches to 99, your order will be triggered and will be executed at 98 or higher. This is Stop Loss order, to save you from further loss, in case market goes against you.

2b) If you want to SELL only at Rs 102, just place limit order for Rs 102. No trigger is required.

Hello All

I am very new to trading and don't know many advanced concept. I read about limit price and stop loss on internet (because i know nobody who could explain me in person). i am writing what i understood about it..please tell me if i am wrong or right..many many thanks in advance

CASE 1--buying--- if current CMP is 100 and i set trigger price 99 and limit price 98 for buying

it means that as soon as price falls to 99 , my order would be put and as soon as it reaches 98 or below , it would be executed.

CASE 2---for buying -- if current CMP is 100 and i set trigger price 101 and limit price 102..so as soon as price reaches 101 my order would be put and executed somewhere between 101 and 102 (if there is enough liquidity in market and price don't change abruptly)..i.e it would be bought at a price less than 102 ..but it can be 101 or 100 or 99 ....but order would only be put when the CMP as atleast touched 101 even though for a small time.

CASE 3---for selling ---if current market price is 100 and i set trigger price as 99 and limit price as 98 ..so it would sell my shares at a price greater than 98...it can be anything like 98, 99 ,100 depends upon how fast market changes..but only be triggered only and only if the price touched 99 even for a while.


CASE 4 --- for selling--- if CMP is 100 and trigger price is 101 and limit is 102...then as soon as price touches 101, order would be put and as soon as price crosses 102..my order would start executing,.. ALL the orders would be executed at a higher price than 102.




AM I WRONG?
please make me clear if i made some mistake or my understanding is wrong...

THANK YOU

 

[raj333]

Thank you..you made it clear to me.

Here are correct way for Case 1 and Case 2:

Case 1: Assume CMP is Rs 100, and you are looking for BUY
1a) If you want to Buy only if it reaches above 101 and maximum rate you are willing to pay is 102, then set trigger as 101, and limit as 102. Once CMP touches 101, your order will be triggered and will be executed at 102 or less.

1b) If you want to buy only at Rs 98, just place limit order for Rs 98. No trigger is required.

Case 2: Assuming CMP is Rs 100, and you are looking for SELL

2a) If you want to SELL only if it reaches below 99 and lower rate you are willing to sell 98, then set trigger as 99, and limit as 98. Once CMP touches to 99, your order will be triggered and will be executed at 98 or higher. This is Stop Loss order, to save you from further loss, in case market goes against you.

2b) If you want to SELL only at Rs 102, just place limit order for Rs 102. No trigger is required.

 

[escape]

Thank you..you made it clear to me.

That's great

 

[onlinegtrash]

Here is a easy way to understand SL:


SL limit buy:

will be triggered when price moves UP your trigger price.

SL limit sell:

will be triggered when price moves DOWN your trigger price.

so if you want to buy when prices are raising above 100Rs/-
you put a SL buy trigg @ 100 and a SL buy limit price slightly above trigg price (say 100.25).

SL will remain dormant when price is below 100.

same applies for selling...

Just remember two things:
#1 To use SL to jump into trend

SL orders are used to buy/sell in same direction of price movement.

that is to jump in uptrend put SL buy above current price
to jump in downtrend put SL sell below current price

#2 To use SL to control risk
If you want to use SL as risk control, After you buy, you place corresponding SL sell (below the buy price level).
and it will get triggered when your trade goes wrong and will take you out from further losses.