How to Put a Stop Loss in Sharekhan: A Comprehensive Guide

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How to Put a Stop Loss in Sharekhan

Investing in the stock market involves a certain level of risk. One of the fundamental tools that traders use to manage and mitigate this risk is the stop-loss order. Sharekhan, a leading brokerage firm in India, provides a robust platform for placing stop-loss orders.

In this article, we will guide you through the process of placing a stop-loss order in Sharekhan, ensuring you can protect your investments effectively.

Stop-Loss Orders

A stop-loss order is an automatic order placed with your broker to sell a security when it reaches a certain price. This mechanism helps traders limit their losses on a position in a security. For instance, if you have bought a stock at ₹100, you can set a stop-loss order at ₹90. If the stock price drops to ₹90, your stop-loss order will be executed, and the stock will be sold, limiting your loss to ₹10 per share.

Benefits of Using Stop-Loss Orders

  • Risk Management: The primary benefit of a stop-loss order is risk management. By setting a stop-loss order, you can limit potential losses without having to monitor your investments constantly.
  • Emotional Discipline: Stop-loss orders remove emotional decision-making from trading. Traders often make impulsive decisions based on market fluctuations, but a stop-loss order ensures that your strategy remains intact.
  • Time-Saving: Stop-loss orders are automated. Once set, they do not require constant supervision, allowing you to focus on other aspects of trading or your daily activities.
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Setting Up Your Sharekhan Account

Before you can place a stop-loss order, you need to have a Sharekhan trading account. Here’s a brief overview of setting up your account:

  • Registration: Visit the Sharekhan website and complete the registration process. You will need to provide personal details, PAN card, Aadhaar card, and bank account details.
  • Verification: Once registered, your documents will be verified by Sharekhan. This process may take a few days.
  • Login: After verification, you will receive your login credentials. Use these to access your Sharekhan trading account.

Navigating the Sharekhan Platform

Sharekhan offers a user-friendly platform with various features for trading and investing. Here’s how you can navigate the platform:

  1. Dashboard: After logging in, you will be directed to the dashboard. This provides an overview of your portfolio, market news, and other essential information.
  2. Market Watch: Use the Market Watch feature to track the performance of stocks you are interested in. You can add and monitor multiple stocks simultaneously.
  3. Order Placement: The platform allows you to place different types of orders, including market orders, limit orders, and stop-loss orders.

How to Place a Stop-Loss Order in Sharekhan

Placing a stop-loss order in Sharekhan is straightforward. Follow these steps:

  1. Log In: Log in to your Sharekhan trading account using your credentials.
  2. Select the Stock: Go to the Market Watch section and select the stock for which you want to place a stop-loss order.
  3. Place Order: Click on the ‘Place Order’ button. You will see various options for order types. Select ‘Stop-Loss Order’.
  4. Enter Details: Enter the quantity of the stock you want to sell and the stop-loss price. For example, if you bought a stock at ₹100 and want to set a stop-loss at ₹90, enter ₹90 as the stop-loss price.
  5. Review and Confirm: Review the details of your order carefully. Once confirmed, click on ‘Submit’ to place the stop-loss order.
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Types of Stop-Loss Orders

There are two main types of stop-loss orders that you can place in Sharekhan:

  1. Stop-Loss Market Order: In this type of order, the stock is sold at the market price once the stop-loss price is triggered. This ensures that the order is executed, but the final selling price may vary slightly due to market fluctuations.
  2. Stop-Loss Limit Order: In this type of order, you set a stop-loss price and a limit price. The stock will only be sold within the limit price range once the stop-loss price is triggered. This gives you more control over the selling price but may not always guarantee execution if the market moves quickly.

Tips for Setting Effective Stop-Loss Orders

  • Determine Your Risk Tolerance: Before setting a stop-loss order, assess your risk tolerance. How much are you willing to lose on a particular stock? This will help you set a stop-loss price that aligns with your risk management strategy.
  • Avoid Setting Stop-Loss Orders Too Tight: If your stop-loss price is too close to the purchase price, you may get stopped out due to normal market fluctuations. Give your investment some room to move.
  • Regularly Review Stop-Loss Orders: The market conditions and your investment goals may change over time. Regularly review and adjust your stop-loss orders to align with your current strategy.
  • Use Technical Analysis: Utilize technical analysis to identify support and resistance levels. Placing stop-loss orders just below support levels can be an effective strategy.

Common Mistakes to Avoid

  • Setting Arbitrary Stop-Loss Prices: Avoid setting stop-loss prices without proper analysis. Use technical and fundamental analysis to determine appropriate levels.
  • Ignoring Market Conditions: Be aware of broader market conditions. During highly volatile periods, you might need to adjust your stop-loss orders more frequently.
  • Neglecting to Use Stop-Loss Orders: Some traders, especially beginners, might avoid using stop-loss orders altogether. This can lead to significant losses if the market moves against your position.
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Advanced Stop-Loss Strategies

For experienced traders, advanced stop-loss strategies can enhance risk management:

  • Trailing Stop-Loss: A trailing stop-loss moves with the stock price. For example, if you set a trailing stop-loss at 5% below the stock price, it will adjust as the stock price increases, locking in profits while still providing protection.
  • Bracket Orders: A bracket order includes a target profit price and a stop-loss price. This strategy helps you automate both profit-taking and loss-cutting processes.

Final Words

A stop-loss order is a crucial tool for managing risk in stock trading. Sharekhan’s platform makes it easy to place stop-loss orders, ensuring you can protect your investments effectively.

By understanding how to set and manage stop-loss orders, you can enhance your trading strategy and reduce potential losses. Remember to regularly review your stop-loss orders and adjust them based on your evolving investment goals and market conditions.

Happy trading!

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