Bracket Order is a special type of order through which you can take an intra-day position and take advantage of extra exposure while being protected through a stop loss order and a profit booking order.

This can be placed by three orders simultaneously,

  1. The first is the limit order for the buying or selling that you are looking for.
  2. The second order is a profit booking order that you set as the profit that meets your expectations.
  3. The third order is a stop loss order. A stop loss order helps you exit a position as soon as the stock hits that bottom of loss. This order is a reflection of the loss that you are willing to take with the stock in concern.

All these orders are placed simultaneously. As soon as any one of the profit limit or stop loss is hit, the other is cancelled. Profit or stop loss order is not going to be placed unless the limit order is executed. It is also important to note that a bracket order is an intraday order and needs to be squared off  before intraday closing of 3:10pm.

Benefits of Bracket Order

  1. Bracket orders make sure that your profit or loss lies between two limits of an acceptable profit and bearable loss that you set.
  2. Because the maximum loss is limited, the margin requirements are really low (between 2% and 2.5%) compared to the 10-11% margin requirement in other risk based trades.

Click here to know the intraday margin required for Bracket Orders.

For more details with example, you may refer to Trade Smart Online blog.

Comments

  1. Mahesh.

    Why is the first buying/selling order limit? The most useful order is SL. Limit order may not give the fill and Market order gives slippage. So why so much inconvience with bracket orders?

    1. Trade Smart Online Article Author

      Hello Mahesh,
      As we had addressed your query through chat, we would like to inform you that earlier, there was only a market option in first leg to place. Recently, limit order has been introduced. Both first leg and second leg could not be a stop loss as per bracket order structure.

    1. Trade Smart Online Article Author

      We understand your concern and would be happy to provide you in case the bracket order structure is changed. However, you can still place manual SL order for buy and sell separately for which you may have to maintain respective margin in your account.

  2. JP

    Hi,

    But I guess Sharekhan is providing SL buying order with BO! Then I think it is doable. Why do not you fulfill all the requirements.

    Thanks

  3. Pawan Sinha

    If last trading price(LTP) moving in my direction ,then how can I know the current trigger price of Bracket Order using Trailing Stop loss, ( if I am using NEST)

    1. Trade Smart Online Article Author

      Hi Pawan,
      You can see your current trigger price in pending orders. You can also double click on pending order to know the history of order placed.

    1. Trade Smart Online Article Author

      Hi Pawan,
      Hope our previous post addressed your query. Please let us know in case the query is not resolved.

  4. SASI

    Dear Sir,

    Why can’t you make a single order entry form with all necessary details needed for a Cover Order / Bracket Order (instead of clumsy / laborious procedure of the trader place one buy cover order two sell cover order three stop loss order)? For example, see the trading application of ICICIDirect.com which is
    user-friendly and easy to place CO/BO (in their Margin Plus product).

    YTLS23

    1. Trade Smart Online Article Author

      Hello Sasi,
      Cover and Bracket orders are placed through single order entry itself. It would be helpful if you could share the procedure that other broker is following.

  5. AMAR KUMAR

    in there any facility of margin for option sell in BO ? if yes than what is margin requirement for sell option in BO/CO?

    1. Trade Smart Online Article Author

      Hello Amar,
      You would get upto 7 times in BO/CO for option sell for derivatives. In case you want to trade in NSE cash, you would get upto 30 time in CO/BO for intraday. Kindly refer our margin calculator.

  6. Jagannath Paul

    For future and option sell in BO/CO segment has changed with 234.96X levarage permanently or for some days?

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