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What are bracket orders (BO) and how to use them?

Bracket order (BO) is a type of order where you can enter a new position along with a target/exit and a stop-loss order. As soon as the main order is executed, the system will place two more orders (profit taking and stop-loss). When one of the two orders (profit taking or stop loss) gets executed, the other order will get cancelled automatically. Bracket orders are essentially algo orders.

Bracket orders can be used only for intraday trades. All bracket orders will be squared off automatically before market close. BOs aren't allowed on BSE stocks, stock options, currency options, and MCX.

Entry with Bracket orders can be done using ‘Limit orders’ and also ‘Stop loss orders’ based on triggers.

The stop loss for exit will be an SL order.

You can also use a trailing stop loss. This means that if the contract/stock moves in your direction (position becomes profitable) by a particular number of ticks, the stop-loss will go up/down based on if you are long or short, automatically.

Using trailing stop loss is optional and if you use the trailing stop loss, you’ll not be able to modify the bracket order.



You get higher leverage with bracket orders (6-20 times) as there is a predetermined stop loss. Check out the margin calculator to know the specific margins for allowed scrips.

For an in-depth explanation, check out this section on the Kite user manual and this article on Z-connect.

Note:

1. When placing a bracket order if the order gets filled in multiple executions, each of the execution will be considered as a separate order and you will be charged brokerage & taxes separately for each partial fill. The same applies for Bracket orders squared off by our RMS team as well.

2. Both BO & CO are intraday products & will be squared off by 3:20 PM  for Equity and 3.25 PM for FO. If the markets are very volatile, BO & CO orders can be squared off at any point at the discretion of the RMS. You will be notified of the same.

3. If the entry leg of your BO gets filled in multiple executions, a Target & SL order for each execution will be shown separately in the order book. Exiting any one of them will result in the exit of your entire corresponding BO position.

4. Your stop loss or target order should be in absolute points and not at the price. For instance, if the limit price at which you have purchased the stock is Rs. 147 and you want to set a sell stop-loss order at 145 then you should enter 2 in the stop loss field. Similarly, to set a target sell order at 150 you should enter 3 in the target field. 

5. If your BO stop-loss sell or buy order has triggered but not executed due to the unavailability of buyers or sellers respectively at the stop-loss limit price, then you will not be able to exit your position using the target order as it is cancelled automatically by the system. In case of scrips that are traded on F&O, the exchanges may revise the circuit limits and trading will resume on the scrip. In case the stop-loss remains pending at the original circuit price, you will not be able to modify the stop-loss limit price. However, you may exit the stop-loss at the market price, in such cases.