Intraday trading is interesting and risky. Isn’t it? With the usage of stop-loss, however, this risk factor can be mitigated. All trading experts will strongly suggest you use stop-loss on your trades. But is stop loss only for intraday trading?
Is that true or you can extend using stop loss across other formats such as swing trading, positional trading or even in long-term investing?
To learn the answer to this, we need to understand the context first and then get to the answer so that you understand why the answer is as-is.
Let’s do that!
Why is Stop Loss Important?
Stop-loss as a feature helps you to specify the loss per stock you can take in order to exit a trade. It keeps you objective and at the same time realistic from the market perspective that loss-making trades are inevitable.
For instance, if you stay emotionally attached with your position assuming that the stock price will pick itself up at a given point in time, you are doing 2 wrongs here:
- You are making your loss-making position worse by sitting on the trade
- By not existing and having capital at your disposal, you are not allowing yourself to indulge in the next potential profitable opportunity, also called opportunity cost.
Thus, it is strongly recommended that you must be using stop loss across the positions you have for your short-term trades.
Now, since you understand the context of using a stop loss, such a feature is super helpful in your short-term trades where markets fluctuate so quickly.
By design, stop loss is meant for intraday trading only. So the answer to the question “Is Stop Loss Only for Intraday Trading” is Yes, it is for intraday trading only. In the trading apps you use, you would not find a provision to use the stop loss feature unless the order type is Intraday.
As you can see from the screenshot above, the stop loss trigger price is available only for the intraday trade type while it is disabled in the delivery format. This image is taken from the Jiffy Mobile trading app from Choice.
Stop Loss Without Intraday
While we have been trying to answer Is Stop Loss Only for Intraday Trading, at the same time, a few traders might now know much about this format of trading at all. Some might have queries on how to do intraday trading while some may even ask – Can you put stop loss without Intraday?
As mentioned above, the concept of stop-loss is applicable for day trading only. However, if you would like to have your risk mitigated for swing trade or positional trade of yours, then there are other features that you can implore.
Stop loss, however, is not one of those features though.
There are a few trading apps that provide features such as GTT or VTT i.e. Good till triggered or Valid till triggered. However, these features help you with order formats where you can specify:
- Trigger price
- Stop Loss Price
- Target Price
Make sure you understand what these order types are and what are the corresponding conditions to fulfil these order types.
How to Use Stop Loss?
This can potentially be a million-dollar question, literally for a lot of traders.
If you really agree that stop-loss is not just important but also mandatory to place in your intraday trades, then yes, you must also know how to actually use it.
Let’s have a quick understanding.
When you go ahead and use a decent performing mobile trading app such as Jiffy by Choice, then you’d see the order placement window as shown below:
The above-shown screenshot shows you one way to use stop-loss in your trades:
- Trade Type: Intraday
- Price: Your entry price
- Target Price
- Stop Loss
- Stop Loss Trigger Price: A price range to get you in the position
- Quantity: No. of shares you’d like to buy
- Amount: Price multiplied by Quantity
- Trailing Stop Loss Price
Post inputting values into these fields, you can go ahead and tap on Swipe to Buy for the trade to get executed.
Another way to use is by employing the Stop Loss order itself but that is for some other day to discuss.
Hopefully, by now, you have understood and got your doubts cleared as far as the point of Is Stop Loss Only for Intraday Trading is concerned. It’s good to have doubts in your stock market trading for these doubts bring more clarity to your overall mindset.
A clearer mindset keeps you away from unnecessary stock market risks.
Feel free to ask more of such queries in the comments section you see at the bottom of this blog and we will try to resolve it for you.