BSE discontinuing SL-M Orders

BSE is discontinuing stop loss market (SL-M) orders from October 9, 2023. This means that investors will no longer be able to place SL-M orders for equity, equity derivatives, currency derivatives, and commodity derivatives. 

Reasons for discontinuing  SL-M orders 

1. To prevent     erroneous order         placement 2. To protect investor

Alternatives  to SL-M orders 

1. ·Stop loss limit       (SL-L) order 2. Trailing stop loss   orders 

What is a stop loss limit (SL-L) order? 

A stop loss limit (SL-L) order is a limit order that is triggered when the stock price reaches a certain level. The order is then executed at the best available price that is at or above the limit price. 

What is a trailing  stop loss order? 

A trailing stop loss order is a type of SL-L order that automatically moves the stop loss price up as the stock price rises. This can help to protect investors' profits if the stock price continues to rise. 

How to prepare for the discontinuation  of SL-M orders 

1. Understanding the        alternatives to SL-M order 2.Choosing the order type       that is most appropriate       for their trading style and      risk tolerance 3. Being aware of the risks      associated with trading 4. Taking appropriate steps       to protect their capital 

Why are SL-M  orders risky? 

SL-M orders are risky because they are market orders, which means that they are executed at the best available price. This can lead to erroneous order placement, especially in volatile market conditions. If the stock price falls sharply, the SL-M order could be executed at a much lower price than the trigger price, resulting in significant losses for the investor. 

Benefits of using  stop loss orders 

Stop loss orders can help investors to:   1. Limit their losse   2. Protect their profit   3. Manage their risk   4. Trade with more          discipline

Tips for using  stop loss orders effectively 

Here are some tips for using stop loss orders effectively: · Place your stop loss orders at a level that limits your losses to an acceptable amount. · Move your stop loss orders up as the stock price rises to protect your profits. · Don't cancel your stop loss orders if the stock price starts to fall. Use stop loss orders in conjunction with other risk management tools, such as position sizing and diversification. 

Conclusion 

BSE discontinuing SL-M orders is a significant change for investors. It is important for investors to understand the reasons for this change and the alternatives that are available to them. Investors should also be aware of the risks associated with trading and take appropriate steps to protect their capital. 

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