≡ Menu

Best Ways To Keep Stop Loss For Intra Day Trading

Fill this Form to Get 5 Day Free Course on Options And Immediately Get an email to Download eBook on Option Greeks


Learn the best ways to keep stop loss in the system for intraday trading.

As soon as a demat account is opened for trading most people start trading Intraday. When you trade Intraday it is highly recommended that you keep SL (Stop Loss) in the system and not leave any trade without stop loss in system.

Why Most Traders Start With Intraday Trading?

1. Intraday trading looks very attractive because traders think they can make money every day. Fact is that they do not, in fact after trading Intraday and speculative trading I myself lost a lot of money when I started trading.

2. Brokers give a lot of leverage in day trading. Day trading is done using the MIS trading advantage. MIS stands for MARGIN INTRADAY SQUARE-OFF. It means that if you do not close the trade by 3.15 pm your broker will close the trade anytime between 3.15 to 3.29 pm. Most brokers have automated this process to reduce the risk.

Because MIS positions are not taken overnight, the risk is slightly less therefore brokers can give more leverage. In India brokers block only 10% of the required margin. For example if a stock is trading at Rs. 500 and a trader wants to buy 300 shares for Intraday trading total money required to buy the shares is 500*300 = Rs. 150,000. If traded for intraday under the MIS, brokers will block only 10% of 150,000 = Rs.15,000/-.

Why they block only 10%? Because it is assumed that intraday movement can only lose maximum 10% of the total amount not more. However if there is more loss than the margin blocked, brokers will call their customers to close the trade or add more money to their account. If the customer does not responds, they close the trade immediately. However these chances are rare.

Traders however should be more cautious when trading Intraday therefore it is highly recommended that you keep a stop loss in the system as soon as the original trade is completed.

If you do not keep a stop loss there can be lot of problems during the trade.

1. Your Internet connection may be disrupted and you may not know what is happening to your trades. It may end the day in huge loss therefore keeping stop loss in the system as soon as possible is a must.

2. Due to some emergency you may have to leave the system and with no stop loss in the system you may lose a lot of money.

3. Your computer may have issues and you may not be able to see your trades. In this case call your broker and ask them to put stop loss in your account.

Here are the best ways to keep Stop Loss in the system.

Most Popular Method Normal Stop Loss Orders

This is very popular among Indian Intraday traders. Almost every Intraday trader knows this method. This method is simple, just take a trade and keep a stop loss in the system as soon as the trade is completed.

For example:

1. Buy Stock XYZ at 95, Stop Loss (Sell) at 90, Target (Sell) at 100, or,
2. Sell Stock XYZ at 95, Stop Loss (Buy) at 100, Target (Buy) at 90.

If Ex. 1 is being decided by the trader, they will buy the stock as soon as it reaches 95 and immediately thereafter keep a Sell Order in the system at 90, to avoid more than 5 points loss. If they are wrong and the stock falls down to 90, the Stop Loss gets triggered and the order is sold at 90 with the max loss of 5 points.

The above can be done on Options and Futures as well.

Please note that Intraday or day trading margin blocked for Equity Cash, Options and Futures differs because of the risk involved.

There are two types of Stop Loss Orders.

A) Trigger Price Orders:
B) Limit Price Orders:

Here the broker trading system asks for a Trigger Price and a Limit Price.

Lets take the above Example 1 – Buy Stock XYZ at 95, Stop Loss (Sell) at 90, Target (Sell) at 100.

Suppose the trade has been taken and the trader decides to take a Stop Loss between 90 and 88, then the Trigger Price should be kept at 90 and the Limit Price at 88. This will ensure that the stop loss gets executed between 90 and 88 only.

Please note that for the Buy Stop Loss orders, the Limit Price has to be higher than the Trigger Price.

For above Example 2, Stock XYZ was sold at 95 and the trader wanted to take stop loss between 100 and 102. In that case the Trigger Price will be 100 and the Limit Price will be 102.

The above will ensure that the stock is sold between 100 and 102 not above 102.

Difference between Trigger and Limit Price

The Trigger Price is the place where the Stop Loss or the Profit Taking Order gets activated in the market and the system tries to sell or buy back the trade with the best possible buyer or seller between the Limit and the Trigger Prices. However if there is a jump, and no trade takes place in between the Trigger and Limit price, then the order gets pending and the Sell or Buy order does not get executed.

Warning:

During very volatile market conditions it is highly recommended that both the Trigger and Limit prices are entered in the system, else if only the Trigger price is entered, the order will be completed at any level below or above the Trigger Price as the trader has not specified any limits on the Stop Loss Order.

For example, if the trade was Buy Stock XYZ at 95, Stop Loss Trigger at 90, No Limit Order, Target (Sell) at 100, and if by chance a bad news comes in the stock and it suddenly falls from 95 to 71, then the Sell Trigger Order gets executed at 71 and the loss goes to 95-71 = 24 points, instead of 5 points as decided by the trader.

This mistake is being done by a lot of Intra day traders in the world. Please ensure you put both the Trigger and the Limit Order Price in the system to avoid such a situation from incurring huge loss.

Another popular stop loss method is percentage on margin blocked stop loss method.


What you should do now

1. If you have still not subscribed for my free 5 days course you can do by filling the form above. You will learn a lot about option trading.

2. If you are a new option trader, not much experienced and are making losses you can do my paid course. I recommend Nifty Conservative Option Course for beginners because it is easy to understand and easy to trade. Even a 18 year old young trader or a housewife can learn it and start trading from next day. It will help you to earn consistent monthly income without any software or speculation or stress or big risk. You will learn proper hedging strategies that works in any market condition.

3. If you are banknifty weekly options trader you can do my Bank Nifty Weekly Options & Futures Strategy Course. You will learn future and option hedging strategies that works in volatile market condition.

Testimonials

What Traders Say About My Course

Course fees: Click here to know the course fees.

Here is complete process of my course

1. Once you pay I will send you the course materials for studying to your email.
2. You read and ask me questions via phone/whatsapp/email to clear doubts.
3. Then you start paper trading and still can ask me questions.
4. After about one month you can start trading.
5. Since doubts can come anytime the support will be there for one year.

Within one month you can start trading on your own. No need to depend on anyone once you are on your own.

If you have any question you can contact me.

You can read about me here and my trading mistakes here.

TheOptionCourse.com Copyright @ All Rights Reserved
Dilip Shaw, Founder

Copyright Infringement: Any act of copying, reproducing or distributing any content in the site or newsletters, whether wholly or in part, for any purpose without my permission is strictly prohibited and shall be deemed to be copyright infringement.

INCOME DISCLAIMER: Any references in this site of income made by the traders are given to me by them either through Email or WhatsApp as a Thank You message. However every trade depends on the trader and his level of risk taking capability, knowledge and experience. Moreover stock market investments and trading are subject to market risks. Therefore there is no guarantee that everyone will achieve the same or similar results. My aim is to make you a better & disciplined trader with the stock trading and investing education and strategies you get from this website. Please note that I DO NOT give tips or advisory services by SMS, Email, or WhatsApp or any other form of social media. I strictly adhere to laws of my country. I only offer education on finance, investments on stock markets in the best possible way as much as I can through this website. Still, you must consult an authorized advisor or do thorough research before investing in any stock or derivative before trading any strategy given in this website. I am not responsible for any investment decision you take after reading any article given in this website. Knowledge is the only way to get success in stock markets. I try my best to give stock market investing and trading knowledge through the articles posted in this website. Thanks for visiting my website.

Percentage On Margin Blocked Stop Loss Method
Rs 2000 Intraday Strategy For Day Trading Using Scalping

About the author: I started trading stock markets since 2007. However my first 3 years were losses. Then I dedicated almost 1 year on studying, researching, paper trading options and learned a lot in that time. Since 2011 I am trading Nifty options profitably. Call me if you need any help trading options on 9051143004.

{ 1 comment… add one }
  • Ashok

    good suggestion.
    thanks & regards,
    ashok

Leave a Comment

Menu