Why is my account in debit after placing a stop-loss order for my position?

A position that has been hedged might be the reason for an account debit following the SL placement. In the case of a market downturn, hedging is a straightforward alternative for keeping your trading positions from losing money. Here is more information on hedging. Keep in mind that your hedged trades offer a margin advantage. As a result, less money will be set aside for your hedged bets. Let's say you have two available, mutually exclusive positions. On one of the positions, you place a Stop-Loss order. When you execute a stop-loss order on either of the positions, the position is no longer hedged. It is seen as two available jobs instead.

The gap for the two available positions rises right away. You will be alerted through SMS and email of the margin deficit (lack of money) if you do not have sufficient funds in your account to cover the margin for a naked position. To prevent having the position squared off (closing/exiting an existing position is referred to as "square off"), you can now deposit money into your account. Additionally, you may avoid using a stop-loss order by keeping track of the hedged position and quitting when appropriate.

Use a GTT order rather than a stop-loss order on Hedged positions to prevent losing the margin advantage. Other brokers in India do not provide this GTT function.

For Ex: Suppose you placed a buy order on reliance 100 quantity @ 2000 and the position hedged with short future of reliance worth Rs 50,000 margin. Afterwards consider the net blocked margin is Rs 1,50,000 because of hedged margin benefits.

Placing a stop loss order will affect and removes the hedge position benefits. As a result, you have to pay full amount for long position. Then the blocked margin will be Rs 2,00,000. In case of insufficient fund, you will get a notification for this.

Solution: Place a GTT order instead Stop loss order to maintain blocked amount.