Published : 03 October 2023
By : Sachin Gupta
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.
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).
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.
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.