The GTT stoploss is invalid prompt appears when placing an order to buy index options to encourage the use of stoploss during trading, particularly given the inherent risk associated with options trading. This feature aims to promote responsible trading, especially in the context of potentially risky index options. To learn more, see Why should a stoploss be set using GTT when buying stock or index options?
When purchasing index options, the order window will display a prompt to place a GTT stoploss price. Although it's possible to proceed with the order without configuring a GTT stoploss, Zerodha strongly recommends using this feature to safeguard investments and manage risk effectively.
GTT stoploss orders can serve as a valuable tool for minimising potential losses and establishing a predefined exit strategy. The GTT stoploss order remains in effect until clients opt to cancel it, ensuring ongoing protection and peace of mind. If there's uncertainty about setting an appropriate stoploss percentage, a range of 5 to 10% serves as a solid starting point. Effectively managing positions is vital to resist the temptation of averaging down, a practice that can lead to substantial capital loss. Ensure to cancel any open GTT stoploss orders when directly exiting the positions to prevent unintended positions from accumulating in the account. The GTT stoploss system elevates the trading experience and facilitates well-informed decision making. To learn more about the risks of option buying, visit zerodha.com/z-connect/nudge/option-buying-the-riskiest-trade-out-there.