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What was Trailing Stop Loss in Zerodha
A trailing stop loss Zerodha order was a type of stop loss order that automatically adjusts its price as the market price of the security moves.
This means that the stop loss order would always be a certain distance (as specified by the trader) behind the market price, regardless of whether the price rises or falls.
For example, if you bought a stock at ₹100 and set a trailing stop loss in Zerodha of ₹5, your stop-loss order would be placed at ₹95. Your trailing stop loss Zerodha order would also rise as the stock price rises, staying at ₹5 behind the market price. If the stock price falls below ₹95, your trailing stop loss Zerodha order will be triggered, and your shares will be sold.
How to Put Trailing Stop loss in Zerodha
How to set trailing stop loss in Zerodha: No, you can’t set trailing stop loss in Zerodha. Because Zerodha currently does not offer trailing stop loss orders.
Earlier, the trailing stop loss in Zerodha was available as part of the Bracket Order (BO). With the BO facility removed, the investors now do not have access to place trailing stop loss in zerodha.
Why has Zerodha stopped Bracket Orders (BO)
Bracket orders are a type of order that allows you to set both a target price and a stop-loss price for a trade. The order will automatically sell your shares if the stock price reaches your target price. The order will automatically buy your shares back if the stock price reaches your stop-loss price.
Bracket orders were popular with Zerodha customers because they allowed them to take advantage of higher intraday leverages. Leverage is a way to amplify your profits, but it also increases your risk.
The problem with bracket orders is that they can sometimes lead to unintended consequences in volatile markets.
For example, if you place a buy bracket order for 100 shares of TCS at Rs. 3000, with a target price of 3005 and a stop-loss price of 2995, and the stock price suddenly trades at both prices, you could end up with an unintended short position of 100 shares in Reliance. The system will sell your shares at 3005 and immediately buy them back at 2995.
Zerodha stopped offering bracket orders because they were concerned about the risks associated with these unintended consequences. They also felt that the risks outweighed the benefits of bracket orders.
Also Read: What is T1 in Zerodha: 3 Restrictions & Tips to Manage it
Advantages and Disadvantages of trailing stop loss Zerodha
Trailing stop loss Zerodha orders used to offer several advantages, including:
- They can help you to limit your losses if the market price of a stock falls.
- They can help you to lock in profits if the market price of a stock rises.
- They can be used to automate your trading.
However, trailing stop loss Zerodha orders also had some disadvantages, including:
- They can be triggered too early if the market price of a stock fluctuates rapidly.
- They can miss out on potential profits if the stock market price rises.
Frequently Asked Questions (FAQs) about How to Put Trailing Stop loss in Zerodha
Wrap Up on How to Put Trailing Stop loss in Zerodha
Trailing stop loss orders are an advanced form of stop-loss order that automatically adjusts their price as the market price of a security fluctuates; they ensure that they always lag a certain distance behind current market prices, regardless of any increases or decreases.
Trailing stop-loss orders can be invaluable in mitigating risk and protecting profits, provided they are used appropriately and understood how they work. But they must be used judiciously and knowledgeably.
Trailing stop loss in Zerodha is no longer available due to Zerodha’s Bracket Order feature being discontinued as of March 2020.
Do you know: What is LTP in Zerodha & How to Profit from it in 2023
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