A lot of traders get confused on what kinds of stop loss orders to take. Experienced traders put limit orders and watch the markets while new traders watch the markets and take normal stop loss when they see the stock is moving against their trade.
When things can be automated we should automate the process of stop loss orders. This is the Stop Loss Limit Orders. Once the trade is taken a trader can decide where to take a stop loss and keep that order in the system.
If the stock comes near it and breaks the level, the stop loss limit order gets triggered.
Do not get confused Stop Order does not mean that it is just the stop loss order, it can be placed to book profits as well.
However to place a stop loss or stop profit order in the system there is a problem.
When you put the first stop system either the profit taking or the loss, no extra margin money is blocked as the system knows it is only to close the order so nothing extra is required.
But when you place the second stop or profit taking order it is considered a new trade and more margin is required.
Let say you bought a stock for 100 and want to take profit out at 105. But you are in a hurry and leave your system but want to make sure you want to take a SL at 95. You are first worried about stopping the loss so keep 95 in the system as sell the stock at 95. Now as soon as you want to keep the profit booking stop at 105 this will be treated as a new trade. Your system does not care about your profit or loss. It does not have any brains. All it knows till now is that you bought the stock at 100 and want to sell it for 95, so no more margin is required. But as soon as you keep another stop sell at 105 it treats as a new trade as it considers the first one as the final stop, the second one as a new trade.
So as soon as you keep another sell at 105 it will ask for new margin.
There is another problem. Let say you had the margin and kept the stop loss at 95 and profit stop at 105 and left your system for the urgent work. Let us assume after 1 hour the stop loss is hit at 95 and the order is not complete, but the sell the stock at 105 is still alive in the system.
Because the system treat edit as a new trade so why should it close that?
Please note that you may consult about this from your broker as well. Some brokers have this facility to cancel any other trade in the same stock or option if one of the stop got triggered. However the second stop has to be in of same type and same stock same number of shares.
For example if the stock was XYZ, then the second stop should be also be of XYZ. If the shares bought was 10 then the second stop should also ne 10 only. If the stock was bought for Intraday then the second stop should also be for Intraday not positional.
Hope you got the point, everything – the type of trade, the indices, the number of shares all should be same only then the second stop will also get cancelled.
But please make sure that your broker allows this or not. As far as I know most brokers only allow one stop else, they treat the second stop as a new order and ask for more margin plus they will not cancel the second order automatically, you will have to manually cancel the second order.
That is the reason it is always better to hedge the trade as soon as you take the original trade. There is no tension there is no extra margin required.
How to hedge the trades is properly explained in my course.
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Hi, I am Dilip Shaw, owner of this website. I am a trader like you. I have been trading since 2007, but lost a lot of money till 2010. I then stopped trading and studied options like college exams. Started trading again from 2011 and never looked back since. I did a lot of research, read books and did countless paper-trading before being profitable. You can read about me here.
My conservative trading course since 2014 is helping many retail traders just like you who have a job or business make consistent profits like this:
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You can do this course from your home. Some traders make amazing profits like Rs. 16.26 lakhs profit in 5 days though results may differ for all.
This course helps you learn to trade conservative option strategies for monthly income. Once you finish the course you can start trading immediately. You can start trading from any day. No need to wait for expiry. You will make profits consistently.
This course is good if you have a regular job or business. You DO NOT NEED to monitor your trades every second.
What You Get?
Before reading please understand that for all 5 strategies, strike selection will be taught. Strike selection while trading Options is the most essential part to succeed.
You get two conservative non-directional strategies on options, one conservative stock option strategy and two conservative directional strategies on Future & Option combination.
Non directional trades are profitable 80% of the times and make 3-5% per trade (Results may vary).
Directional strategy makes money fast. It does not matter which side the stock moves. In fact you make more when you are wrong in the Future trade. 🙂 Some amazing profits possible here.
The stock option trade makes 30,000 in one trade and if SL is hit there is a way to recover losses plus make 30k in that trade.
Technical knowledge is NOT required. No need to monitor trades every second.
In the course you will learn how to select the strike prices. You learn when to trade, which strikes to sell which to buy, how much profit target you should be looking for, the best place to take stop loss and what to do after taking stop loss – means how to get that money back. The success rate is more than 80%.
Since trades are properly hedged there is no stress in trading my strategies.
I am very confident that you will make money trading my strategies. To help you succeed I offer few months support for FREE.
11 Reasons Why You Should Do The Course:
1. TA Knowledge NOT required
2. NO Software Required
3. Regular Monitoring NOT Required
4. Continue with Your Job
5. Do Course From Your Home
6. 100% Hedged
7. Stress-Free Trading
8. Not too much money needed to trade
9. Scaling Possible
10. One Time Fee
11. FREE Support For Months
To know more Call/SMS/WhatsApp me on 9051143004 or email me now. I know English and Hindi.
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P.S: So many years of trading has thought me one thing - it is always better to make small profits month after month, rather than lose money month after month trying to make too much money. It never happens. But small money accumulated month after month can become very big in only a few years.
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