What is Stop Loss?
A stop loss is a pre-defined exit when the market moves against you by a set amount. It caps loss per trade when fills match your plan.
Formula
Stop Loss Price (Long) = Entry Price - Risk Amount Stop Loss Price (Short) = Entry Price + Risk Amount
Indian market context (NSE)
Reference levels: Nifty 50 at 24,300, Reliance Industries at ₹1,300, Bank Nifty futures at 55,000 (lot size 30). Examples below show how Stop Loss shows up on Indian index, equity, and futures books — update to live quotes in your journal.
Nifty 50 perspective
Long Nifty futures at 24,300 with a 0.4% risk budget places a stop near 24,203 (≈97 points). On a ₹10 lakh index sleeve, that is roughly ₹7,300 risk before costs if one lot is used.
Reliance Industries perspective
Reliance long at ₹1,300 with ₹6,500 max loss on a ₹5 lakh position implies a stop near ₹1,287 (1% / 13 points). Use GTT on Zerodha or OCO where available.
Bank Nifty futures perspective
Bank Nifty futures long at 55,000 risking 120 points (₹3,600 per lot at lot size 30) caps loss per contract; size lots so total heat stays inside your daily loss rule.
| Order type | Behaviour | NSE note |
|---|---|---|
| SL | Limit triggers after stop hit | May not fill in fast markets |
| SL-M | Market after trigger | Higher fill odds, slippage risk |
| Mental stop | Discretionary | Poor for review — log if used |
How to validate
- Validate Stop Loss fills against broker contract notes monthly.
- Measure median slippage in points/₹ for Stop Loss on Bank Nifty vs mid-caps.
- Flag sessions with abnormal rejections or partial fills for separate review.
- Compare limit vs market tags only on symbols with similar liquidity.
How to track in TradeLyser
- Record order type, limit price, fill price, and latency on the trade.
- Tag “slippage > plan” when Stop Loss fills worse than expected.
- Monthly slippage report by symbol and order type in analytics.
- Reconcile with broker order log quarterly.
Best practices
- Choose Stop Loss before the move, not after FOMO entry.
- Default to limits on illiquid mid-caps; markets on urgent exits only.
- Log rejected orders — they reveal unrealistic limit discipline.
- Review slippage in R-multiples, not only rupees.
Common pitfalls
- Chasing with market orders after Stop Loss already moved.
- Using limits on fast Bank Nifty breaks without timeout rules.
- Not recording partial fills — skews performance stats.
- Assuming broker fills match intended Stop Loss every time.
How to use this in TradeLyser
Store planned stop ₹ and actual exit ₹ on every trade. Weekly, measure slippage distribution on Bank Nifty vs Nifty tags.
Related terms
Position sizing translates account risk into quantity. With a ₹2,000 risk cap and ₹40 stop per share, size is 50 shares — before lot multiples on F&O.
Risk per trade is the planned loss at your stop — not the notional value of the position. A ₹10 lakh notional trade might risk only ₹3,000.
A trailing stop adjusts the exit level as price moves in your favour, maintaining a fixed distance or structure-based buffer.
By trader level
Start here — essential concepts
New to trading or journaling? These are the core terms you need to understand before anything else.
FAQ
Hard stop or mental stop on NSE?
Hard stops enforce discipline; mental stops fail under stress — journal violations.
Stop beyond wick or structure?
Buffer reduces noise but increases risk — define per setup.
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