Question

A stop-loss buy order with a trigger price of ₹ 500 will be triggered when:

• A. The price drops below ₹ 500
• B. The last traded price is ₹ 499
• C. The price is constant at ₹ 500
• D. The last traded price is ₹ 500 or more
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Hint:

For a Stop-Loss Buy order: Trigger occurs when $\text{LTP} \ge \text{Trigger Price}$.
For a Stop-Loss Sell order: Trigger occurs when $\text{LTP} \le \text{Trigger Price}$.

Answer 1

The Correct Option is D

Step 1: Understanding Stop-Loss Trigger Logic:
A stop-loss order is an order that remains inactive in the exchange's stop-loss book until the market price reaches a specified threshold, known as the trigger price. Once this price is reached, the order is activated and entered into the active order book.

Step 2: Analyzing a Stop-Loss BUY Order:
A stop-loss BUY order is typically used by short sellers to limit their losses if the stock price rises. For a buy order, the trigger price is set above the current market price.

Step 3: Defining the Trigger Condition:
If a stop-loss buy order is set with a trigger price of ₹500, the trigger condition is met when the market price rises to or exceeds this level. Therefore, the order will be triggered when the last traded price (LTP) is ₹500 or more (D).