The concept goes like this, Suppose you want to buy stocks and you also do not want to loose much on the purchase, you use the stop loss option. This works like this.
1. You buy a share of XYZ comp for Rs.10 and is now in your account.
2. You feel that the share may fall down, now you want to minimise your loss what one does is to sit in front of the system and watch the slide show(price slide) and eventually may have to sell incurring more loss. This is where you use the stock option. In this there are 2 things you have to know:the share should already be bought and be credited to your account and once you have bought the share you place a sell order with a stoploss option wherein you indicate the trigger price which is slightly higher than the sell price or equal to the sell price.
In the example above you have decided not to loose more than 1 Rupee per share, in this case you place a sell order with a trigger price of 9.50 and selling rate which may be equal to 9.50 or 9 which you would have decided. When the market slides down and reaches a price of 9.50 your shares are sent to the queue and if it reaches 9 they are automatically sold or else they remain with your acccount.
The same concept can be used even for placing buy stoploss where in you would have already sold the share you had bought. Do some experiments with one or 2 shares of some company on some trading day and you would understand the concept better.
Vijay Bhaskar
1. You buy a share of XYZ comp for Rs.10 and is now in your account.
2. You feel that the share may fall down, now you want to minimise your loss what one does is to sit in front of the system and watch the slide show(price slide) and eventually may have to sell incurring more loss. This is where you use the stock option. In this there are 2 things you have to know:the share should already be bought and be credited to your account and once you have bought the share you place a sell order with a stoploss option wherein you indicate the trigger price which is slightly higher than the sell price or equal to the sell price.
In the example above you have decided not to loose more than 1 Rupee per share, in this case you place a sell order with a trigger price of 9.50 and selling rate which may be equal to 9.50 or 9 which you would have decided. When the market slides down and reaches a price of 9.50 your shares are sent to the queue and if it reaches 9 they are automatically sold or else they remain with your acccount.
The same concept can be used even for placing buy stoploss where in you would have already sold the share you had bought. Do some experiments with one or 2 shares of some company on some trading day and you would understand the concept better.
Vijay Bhaskar