Tips to manage stock market trading after changes in Stop Loss Orders

Published : 03 October 2023

By : Sachin Gupta

BSE to discontinue Stop loss orders

BSE has decided to stop offering "Stop Loss with Market Condition" (SL-M) in the equities, equity derivatives, currency derivatives, and commodities derivatives divisions as of October 9, 2023.

Limit orders instead of SLM

Investors should utilize limit orders rather than SL-M to defend against impact costs brought on by freak trades. Limit orders prevent freak trades by guaranteeing price execution at a certain price, but they do not ensure that the order will be filled.However, there is a way to combine the benefits of both order types, namely to benefit from both the order fill guarantee of a market order as well as the price protection of a limit order (hence no freak trade).

Stop loss order

With a stop loss order, a price at which a market order or a limit order will be executed can be defined. These triggers are set up on the exchange rather than in the systems of the brokers.

Stop loss Limit order

The SL-L (stop loss limit) order can also be used as an SL-M (stop loss market) order. The limit price should either greater or lower than the trigger price, depending on whether you wish to purchase or sell. SL limit order functions as an SL market order if a sell limit order is submitted with a price that is lower than the going market rate.