Trailing stop loss is one of the methods used by the traders to safeguard the profit from the holding stock. If you are trading in zerodha you may search for the option to set trailing stop loss. But you find difficult to get it. So, in this article I am going to tell you how to set trailing stop loss in zerodha.
Previously zerodha had the one order type called bracket order (BO). In the bracket order type, they have that option to set trailing stop loss. Unfortunately now they removed that bracket order type and currently it didn’t have the option to set trailing stop loss. But you can manually set stop loss based on the stock price movement.
Why did zerodha remove the bracket order type?
First you need to understand what bracket order is. In bracket order you can set the entry price, target price, stop loss price and trailing stop loss percentage. Unfortunately due to the high volatility, sometimes both the target order and stop loss order get triggered and so traders are stuck in the short position. so to avoid this zerodha removed the bracket order.
How to manually set trailing Stop loss in zerodha?
I hope you know what is stop loss. It is one of the mandatory things You must know in stock trading. Basically stop loss is used to protect the capital from the huge loss. If you adjust the stop loss based upon the stock price movement then it is called a trailing stop loss.
Let’s say you bought ABC stock at 100 price level, After you bought that stock, the stock price went to 110 price level. Now what you could do is you can adjust the stop loss to 105 price level. Like this if the stock price moves to 115 price level you can adjust the stop loss to 110. By this way you could manually set the trailing stop loss in zerodha.
You might ask me how I can decide the price level to put a trailing stop loss. I give the simple idea, it’s very simple, just use moving average or ATR indicator to find the stop loss level. Below image shows how to find trailing stop loss level using moving average indicator.
Benefits of trailing stop loss
Main benefit is you can lock the profit and save them from turning into the loss. By adjusting the stop loss you can hold the stock for a long time and book the huge profit.
But remember one thing if you set the trailing stop loss very close to the last traded price, then it has a high chance to hit that stop loss and exit you from the current trade. So always set the stop loss little away from the last traded price.
I hope you got an idea about how to manually put trailing stop loss in zerodha. Please follow this one – always have the habit of setting a stop loss when you take a new trade. Because it will help you to save your capital from the huge loss.