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  #1  
Old 3rd September 2007, 10:13 AM
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Exclamation Meaning of Trigger Prices



Hi !!

What is meant by Trigger prices on Stock market in Buy , Sell, Shortsell.

How do you maintain a good stop loss option. ? How to execute an stop loss option.?

lets say i shortsold 10 scrips of xyz company. when wil i need to settle ??
how does square off works ?

Thank you,
Regards,
_hello_
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  #2  
Old 3rd September 2007, 03:34 PM
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Trigger price is the price, which if touched, activates an order.

Suppose you are long on a stock at 102.

You don't want a loss of more than Rs. 1.

So you put a stop loss sell order of Rs 101 with a trigger price of Rs 101.05.

What the system (exchange) does is - it checks if the LTP (Last Traded Price) is less than or equal to Rs 101.05.

As soon as the condition is met, the exchange will put your Rs 101 sell order in the normal order book.

Unless the LTP goes below or is equal to the trigger price, a stop loss trigger sell order is not activated.

Similarly Unless the LTP goes above or is equal to the trigger price, a stop loss trigger buy order is not activated.

Thus a trigger order has two components - trigger price and the price at which the order is placed.

A trigger order may also be a market order. This means if triggered, the trade will take place at market price.

=============================================

Short selling on delivery basis is not possible in India.

(HNIs can borrow stocks to sell in the markets. SCHIL and few other depositories lend stocks to HNIs for shorting)

If you short-sell a stock, you have to cover your position on the same day.

=============================================

Squaring-off is nothing but neutralizing your position.

If you are long on 10 shares of XYZ, squaring-off would be selling off these ten shares.

If you are short on 10 shares of XYZ, squaring-off would be buying back these ten shares.

=============================================

If you still have doubts or some part is not clear, let me know.
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  #3  
Old 7th September 2007, 01:46 AM
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Default Is my understanding right ??

That meant, Triggers are only useful for stop loss buys and stop loss sell.
I am trying to give two examples to check my understanding . thank you.

Will the trigger order in shortsell of some scrips. does it have any meaning ?

---------------------------------------
when you are buying some stock, if you put trigger option that implies - you are about to short cover is it ?

for ex;

1. buy - ticker (xyz) - 10 (quant) - market - trigger price ( 100 rs) .
2. - limit ( 101 ) - trogger price (100rs)

as soon as xyz reaches 100 rupees [ from 90 to 100 ] a trigger order is placed . ( similar to short covering )

in the second case , an limit order is put in the place in similar situation.

----------------------------------------

when you are selling some stock, if you put trigger option that implies - you are about to make stop loss / book profit .

for ex:
1. sell - ticker(abc) - 10 (q) - market - trigger price (100rs).

so in this case , order is placed in the market if the price of abc reaches 100 or below from 110 to 100.

-----------------------------------------

Last edited by _hello_ : 7th September 2007 at 01:52 AM. Reason: clarity
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  #4  
Old 7th September 2007, 08:10 AM
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Yes, you now have the correct idea.

However I would like to clarify one point.

For a sell order, a stop-loss order is activated as soon as LTP is less than the stop-loss price.


Take this case of an illiquid stock.

XYZ closed at Rs 110.

The next day the best buy price for the stock is Rs 105 and best sell price is Rs 115.

Somebody comes and sells a few shares at Rs 105.

Thus in the exchange's system the LTP becomes Rs 105.

Now somebody places a buy order at Rs 109.

When you check prices, you sell buy order at Rs 109 and sell order at Rs 115.

You want a stop-loss at Rs 107.

So you put a stop-loss order with trigger Rs 106.95 and price of Rs 106.8.

However as soon as you place the order, it gets executed and your shares get sold at Rs 109.

Why?

This is because when you put the order, the system checked the Last Traded Price.

This was Rs 105. (Even though the best bid was Rs 109).

Your order was activated and got executed.

Hence it is important to look at LTP before you put a stop loss order - especially for illiquid stocks.

Same is the case for a stop-loss buy order.
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  #5  
Old 31st October 2007, 08:09 AM
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Dear Sir,
This is very complicated issue . can you expain it by more easy examples.

Gopal Kr. Agarwal
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  #6  
Old 31st October 2007, 08:28 AM
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Originally Posted by gopikishana View Post
Dear Sir,
This is very complicated issue . can you expain it by more easy examples.

Gopal Kr. Agarwal
Which part you didn't understand?
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  #7  
Old 2nd November 2007, 10:29 PM
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Dear Alchemist, nice explanation. But a bit confusing. I am really sorry, that I am not able to understand this, as I am new to stock market. can you explain this funda with some real stock example or some charting. I'll be very grateful to you. Thanks in advance.
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  #8  
Old 7th November 2007, 07:29 PM
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Default Trigger price explaination

FOR SELLING STOCKS USING STOP LOSS

LETS SAY YOU BROUGHT 500 RNRL at Rs 50
say, now the stock opened for trading at Rs 105
and now the stock price started fluctuating between Rs 109 and Rs 95.
-> day high be Rs 109 and
-> day low be Rs 95

at this instant lets say the stock price is Rs 102
if you dont know where the stock will end up and you dont want to loose if the stock goes below 100 then you make the following order.

You can keep a stop loss sell order with
Trigger price - Rs 100
Price - Rs 99.90
Quantity - 500

The above thing implies if the stock value reaches 100 then
an instant order will appear in your order book to sell your 500 shares
at 99.90 rupees.

ALCHEMIST please correct me if i am wrong.
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  #9  
Old 7th November 2007, 07:40 PM
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Quote:
Originally Posted by abcefgh View Post

ALCHEMIST please correct me if i am wrong.
you are correct.

thanks a lot for your effort. .

i hope gouravadv has his doubts cleared.
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  #10  
Old 7th November 2007, 07:45 PM
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Default For Buying Using Stop Loss

LETS SAY YOU HAVE 500 RNRL at Rs 50
say, now the stock opened for trading at Rs 105
and now the stock price started fluctuating between Rs 109 and Rs 95.
-> day high be Rs 109 and
-> day low be Rs 95

at this instant lets say the stock price is Rs 102
and you are waiting for a right price to sell of your stocks. lets say you want to sell the stocks at Rs 115

Now you place a sell order using limit price as Rs 115 ( you sell your 500 stocks if the price reaches Rs 115.)
And if you want to buy the same stock at Rs 95 once the sell order has been performed. you can place the following order

You can keep a stop loss buy order with
Trigger price - Rs 115
Price - Rs 95
Buy Quantity - 500

The above thing implies if the stock value reaches 115 then
an instant order will appear in your order book to buy 500 shares
at a limit price of Rs 95 rupees.

ALCHEMIST please correct me if i am wrong.
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  #11  
Old 7th November 2007, 07:57 PM
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Quote:
Originally Posted by abcefgh View Post
LETS SAY YOU HAVE 500 RNRL at Rs 50
say, now the stock opened for trading at Rs 105
and now the stock price started fluctuating between Rs 109 and Rs 95.
-> day high be Rs 109 and
-> day low be Rs 95

at this instant lets say the stock price is Rs 102
and you are waiting for a right price to sell of your stocks. lets say you want to sell the stocks at Rs 115

Now you place a sell order using limit price as Rs 115 ( you sell your 500 stocks if the price reaches Rs 115.)
And if you want to buy the same stock at Rs 95 once the sell order has been performed. you can place the following order

You can keep a stop loss buy order with
Trigger price - Rs 115
Price - Rs 95
Buy Quantity - 500

The above thing implies if the stock value reaches 115 then
an instant order will appear in your order book to buy 500 shares
at a limit price of Rs 95 rupees.

ALCHEMIST please correct me if i am wrong.
this time you are wrong. the buy price has to be higher than the trigger price in case of a stop-loss buy order.

a stop loss buy order is usually used to limit losses in short positions.

in the case you want to buy shares at 95 only if they are sold at 115, you will actually have to wait till they get sold at 115.

once you get sell confirmation from the exchange, you will have to manually punch a buy order @ 95.
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  #12  
Old 23rd November 2007, 10:51 PM
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FOR SELLING STOCKS USING STOP LOSS

LETS SAY YOU BROUGHT 500 RNRL at Rs 50
say, now the stock opened for trading at Rs 105
and now the stock price started fluctuating between Rs 109 and Rs 95.
-> day high be Rs 109 and
-> day low be Rs 95

at this instant lets say the stock price is Rs 102
if you dont know where the stock will end up and you dont want to loose if the stock goes below 100 then you make the following order.

You can keep a stop loss sell order with
Trigger price - Rs 100
Price - Rs 99.90
Quantity - 500

The above thing implies if the stock value reaches 100 then
an instant order will appear in your order book to sell your 500 shares
at 99.90 rupees.----------------------

Dear Alchemist: Please tell me whether I am correct or not in my understanding of trigger price. In the above example my order is placed in the order book as soon as trigger price is hit by a scrip but if the scrip does not touch my sell price then my oder will not be executed and as soon as the scrip goes above 100 say 100.50 then my order is removed from the order book.

Please correct me if I am wrong.

Thanks dear.
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  #13  
Old 24th November 2007, 10:04 AM
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Quote:
Originally Posted by gouravadv View Post

Dear Alchemist: Please tell me whether I am correct or not in my understanding of trigger price. In the above example my order is placed in the order book as soon as trigger price is hit by a scrip but if the scrip does not touch my sell price then my oder will not be executed and as soon as the scrip goes above 100 say 100.50 then my order is removed from the order book.

Please correct me if I am wrong.
Once your order is triggered, it is canceled only at the end of the trading session.

if the scrip breaks 100 and goes below 99.90, then your order will not be executed until the price goes to 99.9 or above it.

Many times trigger orders are not executed because the order price and trigger price are too close.

for example consider this example.

this is the order book for a stock:

100 500 100.10 300
99.9 400 100.20 200
99.8 300 100.30 300
99.7 200 100.40 600
99.6 700 100.50 300

Suppose you keep an order (200 shares) with trigger 99.9 and sell price 99.8.

Then, someone gives an order to sell 2100 shares @ 99.6.

All top five buying orders will get absorbed. Now the order book will look like this:

99.5 700 99.8 200
99.4 400 100.10 300
99.3 300 100.20 200
99.2 200 100.30 300
99.1 700 100.40 600

Your order got triggered, but not executed. Now if people start placing sell orders below 99.8, your order will move back.

99.5 700 99.6 100
99.4 400 99.7 200
99.3 300 99.8 200
99.2 200 100.10 300
99.1 700 100.20 200
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  #14  
Old 24th November 2007, 04:35 PM
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Thanks, Alchemist Ji,

The information is really helpful.

Now, I have understood the concept of trigger price.

Thanks for info.
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  #15  
Old 5th February 2008, 01:55 AM
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Well, empirical tests with different settings for a trailing stop-loss strategy, produce not good results.
It seems that there are no evidence that this strategy produces profitable results. In fact, this strategy has produces worse results than a simple buy-and-hold strategy on average.
There were NO percentage settings that produced better results than a buy-and-hold strategy!


Walrus
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  #16  
Old 5th February 2008, 10:49 AM
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Default Limit order - Buy

Is it true that a limit order placed on any trading day gets cancelled at the end of the trading session for that particular day? well i have this experience that i put a limit buy order for a stock and it never touched it. Now i dont see that order in my account at all. So if its true, then is there any way we can place a limit order for stocks that holds over a period of time? This way i can avoid have to check the status of the stock everyday.

Thanks
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  #17  
Old 5th February 2008, 10:59 AM
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Quote:
Originally Posted by westside View Post
Is it true that a limit order placed on any trading day gets canceled at the end of the trading session for that particular day? well i have this experience that i put a limit buy order for a stock and it never touched it. Now i don't see that order in my account at all. So if its true, then is there any way we can place a limit order for stocks that holds over a period of time? This way i can avoid have to check the status of the stock everyday.

Thanks
No. That is not possible.

Some online brokers allow you to set alerts for stocks.

e.g. ICICIDirect.com allows 50 alerts to be set per account.

http://content.icicidirect.com/maili...rectAlerts.htm
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  #18  
Old 14th February 2008, 11:15 AM
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Question

Dear All

I am new to Margin Order booking; please explain me what is the meaning of ADD Margin and Convert to Delivery in Margin Position

SNL
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  #19  
Old 22nd June 2009, 10:04 PM
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Wink Meaning of Trigger Prices

Hello!
this is my first post. I have just started using the SBI online facility for share trading. As I go through the different discussions on the " use & meaning of Trigger prices", I find that the example given for---

"A Trigger order may be a Market order" --- is not possible in the SBI share trading system. That is because giving Market and Stop Loss options are not simultaneously possible. When you choose the "Market" option the "Trigger setting window" is automatically blocked off.

Is it different in other share trading systems like ICICIDirect.com???

Also if I buy some stocks using INTRADAY option, can I change it to DELIVER option later in the day?
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  #20  
Old 23rd June 2009, 01:35 AM
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Quote:
Originally Posted by Alchemist View Post
A trigger order may also be a market order. This means if triggered, the trade will take place at market price.
Alchemist, your post is something like 2 yrs old now, was it possible then ? or is it still possible in some trading platforms ?

Quote:
Originally Posted by akbcal View Post
"A Trigger order may be a Market order" --- is not possible in the SBI share trading system. That is because giving Market and Stop Loss options are not simultaneously possible. When you choose the "Market" option the "Trigger setting window" is automatically blocked off.

Is it different in other sharetrading systems like ICICIDirect.com???
It's no different in ICICIDirect. We cannot specify a Stop Loss Trigger Price (SLTP) while placing a Market Order.

In fact I do not feel the need for this facility either. We can frame it ourselves if we want.
We can keep the Limit Price far away from the SLTP, something like 5% for a liquid option should be enough.
Our broker ensures that we get the best market price (max for the Sell Order / min for the Buy Order) while executing the order, when triggered.

Quote:
Also if I buy some stocks using INTRADAY option, can I change it to DELIVER option later in the day?
Yes. I do it in ICICIDirect.
Also for Sell, I have done it when I had shares in my account.
-- And this became a lesson learnt. I had already read Alchemist advising someone not to trade his long term positions. But I learnt it only after I did this mistake my self... human being
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  #21  
Old 23rd June 2009, 09:12 AM
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Quote:
Originally Posted by akbcal View Post
Hello!
this is my first post. I have just started using the SBI online facility for share trading. As I go through the different discussions on the " use & meaning of Trigger prices", I find that the example given for---

"A Trigger order may be a Market order" --- is not possible in the SBI share trading system. That is because giving Market and Stop Loss options are not simultaneously possible. When you choose the "Market" option the "Trigger setting window" is automatically blocked off.

Is it different in other share trading systems like ICICIDirect.com???

Also if I buy some stocks using INTRADAY option, can I change it to DELIVER option later in the day?
as suggested by panks, keep the limit price far away from the trigger price and your order will be as good as a market order.

I can't log-in to ICICIDirect.com right now (as usual...).

Once I am able to log-in, I will check what kind of orders are accepted by their system.

I closed my Reliance Money and Indiabulls accounts recently, so am not sure about them either.

You should be able to change an intraday position to delivery position...provided you have sufficient cash margin to take delivery.
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Old 23rd June 2009, 10:03 PM
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Default trigger prices

Thank you panks & Alchemist.

I had a strange experience today. When I was trying to buy ACC at around 11.30 a.m - 12 a.m. , when it was touching low today using /sbicapsonline, it gave a message "order rejected. market closed", while on another terminal by my side, I was watching trading on /money.rediff.com which was showing that trading was very much active. Also using "Market" option, sometimes the order is not carried out. This generally happens when a stock price is showing sudden dip.

Have you ever faced such experience or is it a speciality of /sbicapsonline??

/money.rediff.com website is very good for stock analysis. It gives a real time grahical representation of stock value with time tick and also at a glance you can compare with peer stocks.

Bye.
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  #23  
Old 10th September 2009, 08:19 PM
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What is the difference between limit price and trigger price. I am confused about these 2 terms.

Also say if a stock I own is trading at 100. And I want sell it if I get a price of 110. But I am not in a position to monitor the market all day. So what kind of order would I put in so that when the stock hits 110 the trade gets executed.
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  #24  
Old 10th September 2009, 10:29 PM
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Quote:
Originally Posted by $$Money$$ View Post
What is the difference between limit price and trigger price. I am confused about these 2 terms.

Also say if a stock I own is trading at 100. And I want sell it if I get a price of 110. But I am not in a position to monitor the market all day. So what kind of order would I put in so that when the stock hits 110 the trade gets executed.
The limit price is the price at which you are willing to buy or sell a share.

If you place a limit order to buy X shares at Rs. 100, you will get those X shares at a rate of Rs. 100 (or even less sometimes, which is to your advantage). Similarly, if you place a limit order to sell Y shares at Rs. 100, your shares will be sold at Rs. 100 (or even more sometimes). So by placing a limit order you will not get a price worse than you specify. This of course assumes that the price of Rs. 100 is reached after you place the order.

A market order (which you haven't asked about) is one in which you basically tell the exchange that you don't care about the price, you just want to buy X shares or sell Y shares, irrespective of the prevailing price.

A trigger price is a price you can set to specify whether your actual buy or sell order is sent to the exchange's order book.

For example, you hold a stock in profit. You want to ride the profit for as long as you can but you aren't willing to lose more than 5% of the current market price. So, if the CMP is Rs. 100, you can put a trigger price of Rs. 96 and a stop-loss sell order of Rs. 95. Thus, if the stock price declines to Rs. 96, your sell order of Rs. 95 enters the system and will get executed (provided there are buyers at Rs. 95). If there are no buyers at Rs. 95 but only at Rs. 90, your sell order won't be executed and so this procedure is not 100% guaranteed to work.

If, on the other hand, the stock price keeps rising during the day and you are watching it you can keep modifying your trigger and limit orders to keep the 5% stop-loss target.

Your second question is easily answered: you can put in a limit order to sell at Rs. 110.
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  #25  
Old 11th September 2009, 12:25 AM
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Hi Alchemist,

How can you put a trigger price for buy/sell which would last for many days instead of doing it daily?

I travel regularly & many times it becomes impossible for me to manage buy/sell.

Any ideas?

Thanks,
Hiren
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  #26  
Old 11th September 2009, 07:52 AM
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Originally Posted by hiren View Post

How can you put a trigger price for buy/sell which would last for many days instead of doing it daily?

Any ideas?

Thanks,
Hiren
Hiren @
I don't think you can put a trigger price or buy/sell call for more than one day.

At the end of day all buy/sell trigger prices will be canceled automatically. Hence, you need to put your order for the next day again.

But there is an alternative.

Your broker can monitor your price target every day on your behalf if you would like to do so.

Please keep in mind that it's subject to broker's charges.
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  #27  
Old 11th September 2009, 11:37 AM
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Thanks for the quick reply. I almost always use online sharekhan system.
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  #28  
Old 11th September 2009, 02:23 PM
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Originally Posted by $$Money$$ View Post
What is the difference between limit price and trigger price. I am confused about these 2 terms.

Also say if a stock I own is trading at 100. And I want sell it if I get a price of 110. But I am not in a position to monitor the market all day. So what kind of order would I put in so that when the stock hits 110 the trade gets executed.
just put a sell order @ 109.90.
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  #29  
Old 14th March 2012, 04:20 PM
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Red face need gyan on setting limits.

Hi every one,

This is bit too late for posting here. I came across these post on search from Google. I am new to trading. I use icicidirect for trading. I have some most basic questions, which I've not yet understood in spite of "hazaaar" readings and explanations given all over the internet. I wish some one replies to this post and make me understand in the way I can, I would be grateful.

I have a scenario which I want someone to understand and use the same terminologies as mine and explain it same manner.

I own a stock of Andhra Bank (ANDBAN) of exactly 5 units which I had bought for Rs 100.40 and as on today, this is moving at Rs 135.85.

- I want to experiment with this stock.
- I want to sell it if I get a price of Rs 140. I cannot monitor the market all day.
- I am assuming today it might go up and hit Rs.140 at some point of time not necessarily that it should stay at it. Also I speculate it might fluctuate between Rs.135 to Rs.142. At the end of day it might stop at Rs.138.

Questions
-How to place such an order to sell, such that I make Rs 140 in the above scenario?
-I do not have the slightest inclination of the terminologies in stock, such as trigger price, limit price etc as I am new and am learning.
-So, If some one can explain to me as to how to place such an order with reference to online trading on icicidirect, along with the terminologies that exist in that website, It shall be of great help.
For example if there are terms on the website and If an investor looks at a computer screen for a quote on the stock which might look something like this: Limit Price, Trigger Price, Offer Price, an explanation of what should be done against such terms will be practical and easier for me to understand.

-Please explain what will happen practically when numbers are filled against such variables, and not explain/describe the variable itself because I already know the definitions of them all but unable to understand things practically.

Help greatly appreciated.
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  #30  
Old 16th May 2012, 11:12 AM
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I have shorted 40 shares of Tata Power today at 92.5 planning to cover it by around 89.

But I am unable to place stop loss. In sense I have place a buy order at 89 but at same time want to put a stop loss at 94.5.

Do I have to use trigger price for this option or there is a separate stop-loss option?
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  #31  
Old 16th May 2012, 11:45 AM
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Originally Posted by magnet View Post
I have shorted 40 shares of Tata Power today at 92.5 planning to cover it by around 89.

But I am unable to place stop loss. In sense I have place a buy order at 89 but at same time want to put a stop loss at 94.5.

Do I have to use trigger price for this option or there is a separate stop-loss option?
You will have to place two separate orders and if one is executed, you will have to cancel the second order.

Place a simple buy order at 89.

Also, place a buy order at 95 with trigger of 94.55.
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  #32  
Old 16th May 2012, 12:00 PM
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Thanks one more thing.

If I placed a buy order at 89 and say price is around 92. Can I place a trigger price on it at 88.5 i.e once it touches 88.5 then only 89 price order goes to market? Or I can't use trigger price for this option at all?
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  #33  
Old 16th May 2012, 12:03 PM
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Originally Posted by magnet View Post
Thanks one more thing.

If I placed a buy order at 89 and say price is around 92. Can I place a trigger price on it at 88.5 i.e once it touches 88.5 then only 89 price order goes to market? Or I can't use trigger price for this option at all?
You can't place such orders.
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