A Bracket Order (BO) is an advanced intraday order type that allows traders to place a trade along with a stop-loss (SL) and target (profit-taking) order simultaneously. It helps manage risk and automate trade exits.
Step-by-Step Process of a Bracket Order
1. Place the Main Order (Entry Order)
- You initiate a BUY or SELL order for a stock or index.
- This order can be a limit or market order.
2. Set Stop-Loss Order
- A stop-loss order is placed to minimize losses if the price moves against you.
- If the stock hits this level, the system automatically exits the position.
3. Set Target Order (Profit Booking)
- A profit target order is placed at a predefined level.
- If the stock reaches this price, the order is automatically squared off.
4. Auto-Cancellation Mechanism
- The system automatically cancels the other order when the stop-loss or target order is executed.
- This prevents multiple open positions.
Example of a Bracket Order
Let’s say you place a BUY Bracket Order for Reliance at ₹2,500.
- Target Price (Profit Booking): ₹2,550
- Stop-Loss Price: ₹2,480
Possible Scenarios
- If Reliance hits ₹2,550 → Target executed, stop-loss order is canceled.
- If Reliance drops to ₹2,480 → Stop-loss executed, target order is canceled.
Since Bracket Orders are intraday-only, any open positions are squared off before the market closes.
