How to Use Trailing Stop Loss in Zerodha? | Zerodha Mein SL (Stop Loss) Order Kaise Lagate Hai?

Are you tired of watching your profits disappear as the market fluctuates?

Do you wish there was a way to protect your gains without having to constantly monitor your positions?

If so, then you need to learn how to use trailing stop losses in Zerodha.

Trailing stop losses are a powerful tool that can help you limit your losses and protect your profits. They work by automatically adjusting your stop loss as the market price moves in your favor.

This means that you can set your stop loss once and forget about it, knowing that your profits will be protected even if the market takes a turn for the worse.

In this article, I will show you how to set up trailing stop losses in Zerodha in just a few simple steps >>>>>

I will also share some tips on how to use trailing stop losses effectively?

So if you’re ready to learn how to protect your profits and limit your losses, then read on!

Here’s what you’ll learn in this article:

• What is a trailing stop loss?
• Why use a trailing stop loss?
• How does a trailing stop loss work in Zerodha?
• How to set up a trailing stop loss in Zerodha
• Tips for using trailing stop losses effectively

By the end of this article, you will know everything you need to know about trailing stop losses in Zerodha.

What is a trailing stop loss?

Trailing stop losses are a powerful tool that can help you protect your profits and limit your losses.

They work by automatically adjusting your stop loss as the market price moves in your favor. This means that you can set your stop loss once and forget about it, knowing that your profits will be protected even if the market takes a turn for the worse.

Trailing stop losses can be a lifesaver for traders who are looking to protect their gains. They can also help you to stay disciplined and avoid the temptation to close out a winning trade too early.

If you’re serious about trading, then you need to learn about trailing stop losses. They are a powerful tool that can help you to become a more successful trader.

Here are some of the benefits of using trailing stop losses:

• They can help you to protect your profits.
• They can help you to limit your losses.
• They can help you to stay disciplined.
• They can help you to automate your trading.

If you’re interested in learning more about trailing stop losses, then I encourage you to do some further research. There are many great resources available online that can teach you how to use trailing stop losses effectively.

I hope this brief has given you a better understanding of what trailing stop losses are and how they can benefit you. If you have any further questions, please don’t hesitate to ask.

Why use a trailing stop loss?

Here are the main reasons why you should use a trailing stop loss:

• To protect your profits: A trailing stop loss will automatically sell your position if the market price moves against you, so you won’t lose all of your profits if the market turns.
• To limit your losses: A trailing stop loss will also sell your position if the market price moves too far against you, so you won’t lose more money than you’re comfortable with.
• To automate your trading: Trailing stop losses can be automated, so you don’t have to constantly monitor your positions. This can free up your time so you can focus on other things.

If you’re serious about trading, then you should consider using trailing stop losses. They’re a powerful tool that can help you to become a more successful trader.

How does a trailing stop loss work in Zerodha?

Trailing stop losses in Zerodha work by automatically adjusting your stop loss as the market price moves in your favor. When you place a trailing stop loss order, you specify a trailing amount or percentage. The trailing amount is the amount of rupees that the stop loss will be adjusted by, and the trailing percentage is the percentage of the market price that the stop loss will be adjusted by.

For example, if you place a trailing stop loss order with a trailing amount of 100 rupees, and the market price of the stock moves up by 200 rupees, your stop loss will be adjusted to 100 rupees below the current market price. If you place a trailing stop loss order with a trailing percentage of 10%, and the market price of the stock moves up by 20%, your stop loss will be adjusted to 10% below the current market price.

Trailing stop losses can be a great way to protect your profits and limit your losses. However, it’s important to understand how they work before you use them. Here are some things to keep in mind:

• Trailing stop losses can be triggered by gaps in the market. This means that if the market price suddenly moves up or down by a large amount, your stop loss could be triggered even if the market price has not actually moved against you.
• Trailing stop losses can be triggered by dividends. If a stock pays a dividend, the market price will usually move up by the amount of the dividend. This could trigger your trailing stop loss even if the market price has not actually moved against you.
• Trailing stop losses can be triggered by splits. If a stock splits, the market price will be adjusted accordingly. This could trigger your trailing stop loss even if the market price has not actually moved against you.

If you’re considering using trailing stop losses, it’s important to understand these risks. However, if you use them wisely, they can be a great way to protect your profits and limit your losses.

Here are the steps on how to set a trailing stop loss in Zerodha:

1. Log in to your Zerodha account.
2. Go to the “Orders” tab.
3. Click on the “New Order” button.
4. Select “Trailing Stop Loss” as the order type.
5. Enter the trailing amount or percentage.
6. Click on the “Place Order” button.

Example to set a stop loss while live forex, cash, option, future, commodity trading

Suppose you buy a stock at ₹100 and you want to place a trailing stop loss order to protect your profits.

You set the trailing stop loss order to trigger 10% below the current market price. This means that the stop loss order will initially be placed at ₹90.

If the price of the stock rises to ₹110, the trailing stop loss order will automatically adjust to ₹99 (10% below ₹110).

If the price of the stock then falls to ₹99, the trailing stop loss order will trigger and the stock will be sold.

Here are some tips for using trailing stop losses effectively:

• Use a trailing stop loss that is appropriate for your risk tolerance.
• Set the trailing amount or percentage based on the volatility of the stock or market.
• Review your trailing stop loss regularly and adjust it as needed.

Tips for using trailing stop losses effectively

• Use a trailing stop loss that is appropriate for your risk tolerance. If you are risk-averse, you may want to use a trailing stop loss that is closer to your entry price. If you are more aggressive, you may want to use a trailing stop loss that is further away from your entry price.
• Set the trailing amount or percentage based on the volatility of the stock or market. If the stock or market is volatile, you may want to use a smaller trailing amount or percentage. This will help to protect your profits from being wiped out by a sudden market move.
• Review your trailing stop loss regularly and adjust it as needed. As the market price moves, you will need to adjust your trailing stop loss accordingly. If the market price moves too far against you, you may want to increase your trailing stop loss to protect your profits.
• Be aware of the risks of trailing stop losses. Trailing stop losses can be triggered by gaps in the market, dividends, and splits. If you are not aware of these risks, you could end up being stopped out of a winning trade.

Here are some additional tips:

• Use trailing stop losses in conjunction with other risk management tools. For example, you could use a trailing stop loss in conjunction with a stop loss or a profit target.
• Test different trailing stop loss settings on a demo account before using them in a live account. This will help you to get a feel for how trailing stop losses work and how they can affect your profits and losses.
• Don’t be afraid to adjust your trailing stop loss settings as you gain more experience. As you learn more about the market and your trading style, you may find that you need to adjust your trailing stop loss settings to be more effective.

Example To Place Trailing Stop Loss in Zerodha:

• If the market price of the stock moves up by 100 rupees, the trailing stop loss will be adjusted to 100 rupees below the current market price.
• If the market price of the stock moves up by 200 rupees, the trailing stop loss will be adjusted to 200 rupees below the current market price.
• If the market price of the stock moves down by 100 rupees, the trailing stop loss will not be triggered.
• If the market price of the stock moves down by 200 rupees, the trailing stop loss will be triggered and your position will be closed.

Major Benefits of Trailing Stop Loss

• Best for money management: Trailing stop losses can help you to manage your risk and protect your profits. They can help you to avoid losing more money than you are comfortable with, and they can also help you to maximize your profits.
• Big profits: Trailing stop losses can help you to take advantage of large market movements. If the market moves in your favor, your trailing stop loss will automatically adjust to lock in your profits. This can help you to make big profits even if the market is volatile.
• Protect current profit: Trailing stop losses can help you to protect your current profits if the market starts to move against you. They will automatically sell your position if the market price moves below your trailing stop loss, which can help you to avoid losing your profits.
• Help to save money if the market scenario changes: Trailing stop losses can help you to save money if the market scenario changes. If the market starts to move against you, your trailing stop loss will automatically sell your position, which can help you to avoid losing more money.
• Best if the market goes against you: Trailing stop losses can be especially helpful if the market goes against you. They can help you to cut your losses and protect your capital.
• Avoid zig zag movement: Trailing stop losses can help you to avoid zig zag movement. This is when the market price moves up and down in a small range. With a trailing stop loss, you can set your stop loss to move up as the market price moves up, which can help you to avoid being stopped out of a winning trade.
• Tension free strategy: Trailing stop losses can help you to trade more relaxed. You don’t have to constantly watch the market price and worry about being stopped out. You can set your trailing stop loss and forget about it.

Overall, trailing stop losses can be a powerful tool for managing risk and protecting profits. They can be used in a variety of trading strategies, and they can be especially helpful in volatile markets.

Type of stop loss orders

There are two main types of stop loss orders: stop-loss and trailing stop-loss.

• Stop-loss orders are placed at a specific price, and if the market price reaches that price, the order will be triggered and your position will be closed. For example, if you buy a stock at $100 and place a stop-loss order at $95, if the stock price falls to $95, your position will be closed.
• Trailing stop-loss orders are placed at a specific distance from the market price, and if the market price moves in your favor, the stop-loss order will automatically move with it. For example, if you buy a stock at $100 and place a trailing stop-loss order at 5%, if the stock price moves up to $105, your stop-loss order will move up to $100.

There are also a few other types of stop loss orders, including:

• Stop-limit orders: These orders are similar to stop-loss orders, but they also include a limit price. This means that if the market price reaches your stop price, your order will be triggered, but it will only be executed if the market price is at or above your limit price.
• Market-on-close (MOC) orders: These orders are placed to close a position at the market price on the close of trading.
• Good-till-cancelled (GTC) orders: These orders remain active until they are executed or cancelled.

The type of stop loss order that you use will depend on your trading strategy and your risk tolerance. If you are a conservative trader, you may want to use a stop-loss order. If you are a more aggressive trader, you may want to use a trailing stop-loss order.

• SL order (Stop-Loss Limit) = Price + Trigger Price
• SL-M order (Stop-Loss Market) = Only Trigger Price

It is important to note that stop loss orders are not always guaranteed to be executed. If the market moves very quickly, your stop loss order may not be able to execute at the price you specified.

Hope this helps! Let us know if you have any questions regarding this! 👍👍👍👍👍👍