The trigger price is a fundamental concept in stock trading that plays a pivotal role in automating buy/sell orders. Whether you're a beginner or an experienced trader, mastering trigger prices can enhance your risk management and execution precision.
What Is Trigger Price?
The trigger price is the predefined price level at which a dormant order (like a stop-loss or limit order) becomes active and executes on the exchange. It acts as a "switch" to initiate trading actions when market conditions meet your criteria.
Key Characteristics:
- Activates stop-loss or limit orders.
- Ensures timely execution without manual intervention.
- Integral for risk management across platforms like SBI, Zerodha, and Angel Broking.
Trigger Price Examples
Example 1: Stop-Loss Order
- Scenario: You own shares of XYZ Corp. bought at $100.
- Trigger Price: Set at $90 to limit losses.
- Outcome: If the stock drops to $90, your stop-loss order automatically sells the shares.
Example 2: Buy Limit Order
- Scenario: You want to buy ABC Ltd. if it dips to $50.
- Trigger Price: Set at $50.
- Outcome: The order executes only if ABC’s price reaches $50.
Trigger Price vs. Limit Price
| Parameter | Trigger Price | Limit Price |
|---|---|---|
| Purpose | Activates the order | Caps the execution price |
| Example | Stop-loss triggers at $90 | Sell executes at ≥$88 |
| Flexibility | Fixed activation point | Flexible execution range |
👉 Learn more about advanced order types
Trigger Price on Popular Platforms
1. Zerodha
- Used in bracket orders (BO) and cover orders (CO).
- Combines trigger price with limit price for precision.
2. SBI Trading
- Supports trigger prices for equity and derivative orders.
- Helps automate trades based on technical analysis.
3. Angel Broking
- Offers stop-loss trigger and trailing stop-loss features.
- Ideal for volatile markets.
FAQs About Trigger Price
1. Can the trigger price and limit price be the same?
Yes, but only for specific order types like "Stop-Loss Market Orders" where the limit price is omitted.
2. What’s the benefit of using a trigger price?
- Automation: Eliminates emotional trading.
- Risk Control: Protects against sudden market drops.
3. How is trigger price calculated?
It’s user-defined based on:
- Technical support/resistance levels.
- Percentage drops from purchase price (e.g., 5% below buy price).
4. Does trigger price work in after-hours trading?
Typically no—most platforms execute trigger orders only during live market hours.
Practical Applications
1. Swing Trading
Set triggers near key Fibonacci levels to lock profits.
2. Intraday Trading
Use tight trigger ranges (e.g., 0.5%–1%) to capitalize on volatility.
👉 Explore trading strategies for beginners
Conclusion
Mastering trigger prices empowers traders to execute disciplined strategies, minimize losses, and capitalize on opportunities. Whether you trade via Zerodha, SBI, or Angel Broking, integrating trigger prices into your plan can significantly improve outcomes.
Pro Tip: Backtest trigger price strategies using historical data before live deployment.