Trigger Price

What is a Trigger Price?

A trigger price is a set price at which a trade automatically activates. Traders use it to manage risk and execute orders without constant monitoring.

Common Types of Orders Using Trigger Prices

1. Stop-Loss Order: It automatically sells stocks to limit losses. Suppose you buy a stock at ₹100 and set a stop-loss at ₹90. If the price falls to ₹90, the order activates.

2. Stop-Buy Order: Buys stock at a set higher price to catch breakouts. Suppose a stock is trading at ₹50, and you set a stop-buy at ₹55. If the price hits ₹55, the order activates.

3. Stop-Sell Order: Sells stock at a set lower price for exit or short selling. Suppose a stock is trading at ₹50, and you set a stop-sell at ₹45. If the price drops to ₹45, the order activates.

How Trigger Prices Work?

1. Set a Trigger Price: The trader chooses a price that will activate the order.

2. Wait for the Market to Move: The order stays inactive until the market price reaches the trigger level.

3. Order Gets Activated: Once the trigger price is hit, the trade executes either at the best available price (market order) or a set price (limit order).

Why Trigger Prices Matter?

1. Protects Your Money: Limits losses by automating exits.

2. Keeps Emotions Out: No second guessing, your trade follows the plan.

3. Saves Time: Automates trades, so you don’t have to monitor constantly.

4. Locks in Profits: Helps secure gains with take-profit levels.