A Bracket order is the order type which newly introduced in Indian stock trading portals. A BO consists of two existing orders with the same symbol, quantity & order action. When one of the orders is partially filed the other order’s quantity is automatically decremented by the same amount.
This order gives the option to the user, to enter a new position with ENTRY price, TARGET price & STOPLOSS Price. If the main order is executed the system will place 2 more orders TR & SL. When One of the 2 order gets executed the other order will get canceled automatically. Suppose TR or Sl order not executed system will seek off that position near about 3:15 pm for equity order & 4:45 pm for currency other. BO is the best for intraday trading.
Suppose Mr. Ganesh wants to Buy (Take position) Wipro company share at Rs 100 & his Target price is Rs 101 & Stop loss price is Rs 99 (& current market price is 95) In this situation Mr genes need to set bracket order (buy trigger at Rs.100, TR 101 & SL 99). Suppose Target achieved than Stop loss will be canceled automatically.
Three different legs of Bracket
1st Leg:- Limit Order / Market Order
2nd Leg:- Stop loss Limit Order / Stop loss Market Order.
3rd Leg:- Limit Order / Market Order.
Advantages of Bracket Order.
1) Very helpful for Intraday Trader.
2) Ones you placed the Order you no need to sit in front of Trading desk.
3) Keeps you away from Intraday fear & greed situation of Intraday market.
4) Less entry errors.
5) Helps with psychology teaches you to cut your losses & let your winners run.