How is it possible for the price to hit the market, but the Stop Loss (SL) was not triggered?
There can be multiple reasons for the same:
-
If your Stop Loss is triggered and the limit price is set within the circuit price range (The allowed market range known as upper and lower circuit), but the price moves beyond the circuit range, the order will not get executed. Also, in case of same order and trigger price while placing a Stoploss order, there are chances that due to sudden movement the price goes up/down which leads to stoploss not being triggered and converting resulting the SL order into a limit order. Example: You already have a buy order in your portfolio and you want to place a sell order against that. Assume, that stock is currently trading at 170 with the circuit range of 150 – 200. The stop loss trigger is set at 198 with a limit price of 200 within the circuit range. If the stop loss triggers, but the price moves to 202 due to some event, the order will not execute even though the stop loss was triggered because the limit price of 200 did not hit the market; it moved directly to 202.
-
In case of extremely less volume, where there are not enough buyers and sellers (referred to as an illiquid contract), the Stop Loss will not be executed as the stock may not have enough buyers/sellers at a defined stop-loss limit price by you for the order to be executed which is also known as ‘Market depth’. Example: You have placed a buy order of 10 shares at a certain price in an illiquid stock, where there are only 3 stocks on the sell side at the price mentioned by you. In such a scenario, the orders will be executed for 3 stocks only and the remaining 7 will have to wait for new sellers as the orders get queued. Please note : Price and time preference concept is followed for order execution. In simple words, imagine you're at a restaurant, and you place an order for a dish at a certain price. The kitchen (market) will start preparing your dish as soon as they receive your order. If someone else placed a similar order (same price) before you, their order will be prepared first. This creates transparency and orderly execution process.
-
Sometimes, during a sudden significant movement in a stock’s price, the stop loss limit can be skipped and it might not work as planned, allowing it to be traded at the market price. For instance: If a stock is currently trading at 95, and the stop loss limit is set at 99, but due to sudden news about a company, there is a rapid change in its stock price, reaching 105, your stop loss will not trigger because that particular price did not hit the market.
Note: Consider circuit price (acting as boundaries), market liquidity, and rapid price movements when setting Stop Loss orders. Understanding these factors can help you make more informed decisions and reduce the risk of unexpected outcomes.
What is a Buyback/Takeover/Delisting?
My order is getting rejected with the following error – ‘Order price is outside the trade execution range. Try placing the order again
My order is getting rejected with the following error – ‘The order was rejected to avoid self trade. Try placing the order again’.
Why was the stop loss executed even though the price did not breach the trigger?