InvestorQ : How does a stop loss order function?
Priyanka Jain made post

How does a stop loss order function?

Answer
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ishika Banerjee answered.
2 years ago


Stop Loss (SL) Price/Order – This is the kind of order that allows the Trading Member to place an order which gets activated only when the market price of the relevant security reaches or crosses a threshold price. Until then the order does not enter the market.
A sell order in the Stop Loss book gets triggered when the last traded price in the normal market reaches or falls below the trigger price of the order. A buy order in the Stop Loss book gets triggered when the last traded price in the normal market reaches or exceeds the trigger price of the order.
E.g. If for a stop-loss buy order, the trigger is 93.00, the limit price is 95.00 and the market (last traded) price is 90.00, then this order is released into the system once the market price reaches or exceeds 93.00. This order is added to the regular lot book with a time of triggering as the time stamp, as a limit order of 95.00