Putting Stop losses for any position is an essential step to ensure that no major losses occur if the view on the underlying goes wrong. You should always place a Stop Loss when trading Intraday or positional. You can use a stop loss in Zerodha by following some easy steps.
Before knowing how to use a stop Loss on Zerodha, let’s understand what’s a stop loss.
What is a Stop Loss?
A Stop Loss is an order that is placed on top of an existing order to curb the losses. This is done to protect your capital in an event of a “Black Swan Event” or if your view on the underlying asset goes wrong. In the case of a Long position, one can keep the Stop loss at a certain point below the buying price. Similarly, for a Short position, a buying order can be placed as a Stop Loss at a certain price above the entry price.
How to use a Stop Loss.
Using a Stop loss in Zerodha is extremely simple, as all the presets of a Stop loss order are already present. Stop loss orders are generally placed when you place Intraday trades or Swing trade orders. To place a Stop loss in MIS (Margin Intraday Square-off), you can follow these steps:
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After you have created your position by placing an order, go to the “Position” tab on your Zerodha browser or mobile app.
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Select the order where you want to place a Stop Loss. Click on ‘Options’, and click on ‘Exit’. Once you select Exit the order tab will open, here keep the order type as MIS and select the extreme right option which is ‘SL-M” (Stop Loss- market).
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After selecting the SL-M order, the above box will open where you need to enter the Stop loss price in the “Trigger Price”. After entering the Stop Loss price click on Buy/Sell, as per the order type.
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After completing the above process, the stop loss order will be placed and will reflect under the Orders section. You can modify the Stop Loss price anytime by editing the price in the orders section.
By following these steps you can place your stop-loss order for any of your open MIS positions. Remember that you cannot enter a Stop Loss in CNC orders which are created on the same day. For that, you need to place an exit order manually from your positions on the shares that you already possess.
You should also pay attention to your stop loss order in case you exit your positions manually. The stop-loss order will remain in the terminal even if the existing position is squared off.
Stop Loss Order:
A Stop-loss order is an essential part of trading as it protects your capital from any major draw-downs. One should always place a calculated Stop loss according to your Risk Per Trade while trading Intraday.
When placing a Cover order (CO), there is a mandatory stop loss which has to be entered at the time of placing the order. \
In the same way for any NRML Futures or Options, order you can place a Stop Loss order in the same way as mentioned above.