What is a Bracket Order (BO)?

A Bracket Order is an order product type that combines three orders into one- an initial order, a target order, and a stop-loss order. They are designed to “bracket” your initial order. This means that along with the initial order, there will be two (opposite) side orders placed as well. 
  • Bracket orders work for both buy and sell orders. If the initial order is a buy order, then both the target and stop-loss orders will be sell orders. Similarly, when the initial order is a sell order, the other two orders will be buy orders.

  • Bracket orders are an intraday product, and hence are auto squared-off at the end of the day. They cannot be carried forward.

  • In the event of emergencies, if a user holds an open position and desires to close it out before reaching the predefined prices, they can promptly initiate the 'Square Off" button from the position/portfolio window within the trading platform.

Let us look at the 3 orders involved with an example: 

Mr Ajith wants to buy 100 shares of Wipro at Rs. 400, and book profits at Rs. 420. But, he is worried that the share price may fall further if it crosses Rs. 390.

For this, Mr Ajith can place a bracket order. His main position of Rs. 400 is bracketed by:
1. A target order; a higher-priced limit order at Rs. 420 
2. A stop-loss order; a lower-priced stop-loss order at Rs. 390.

The bracket orders remain in the broker's system until the main order gets executed. As soon as the main order is executed both the bracket orders are sent to exchange. 

Scenario 1: Mr. Ajith's initial order gets executed at Rs. 400 and the stock price rises to Rs 420.  
Here, the target order gets executed, and the stop-loss order of Rs. 390 is automatically cancelled.

Scenario 2: Mr. Ajith's initial order gets executed at Rs. 400 and the stock price falls to Rs 390.
Here, the stop-loss order gets executed, and the target order of Rs. 400 is automatically cancelled.

Scenario 3: Mr. Ajith's initial order gets executed at Rs. 400. The stock price does not hit the target price of Rs. 420 nor the stop-loss price of Rs. 390, but remains between these two figures at 3:15 p.m. 
In this case, both pending orders (target and stop-loss) are automatically cancelled at 3:15 p.m. The open intraday position (buy order at Rs. 400) is squared-off by Geojit at the market price at 3:15 p.m.

Scenario 4: Mr. Ajith's initial order to buy Wipro shares at Rs. 400 does not get executed and remains pending.
In this case, the bracket orders for Rs. 420 & Rs. 390 will not be sent to the exchange. They will be maintained in the broker's (Geojit) system till the initial order gets executed. 
Since a bracket order is an intraday product, all pending orders are automatically cancelled at 3:15 p.m. 

  • The Trailing Stop-Loss Feature (optional): Bracket orders also have an optional trailing stop-loss feature wherein the stop-loss order is automatically modified based on favourable price movements for the position taken. This feature can be enabled by ticking 'TSL' in the order placement window. 

In case of a long position, the stop-loss price 'trails' favourable (upward) movements in the stock price. Unfavourable (downward) price movements on the other hand, will not result in the stop-loss order being modified.

Continuing with the example above, if the TSL feature is enabled:
  • For every Re.1 increase in the price of Wipro, the stop-loss order price is automatically modified and increased by Re.1.

On the other, if Wipro's price falls, the stop-loss order price remains unchanged.

To place a Bracket order on SELFIE / TraderX:

Select the Product as BO in the order placement window

If the main leg of a bracketed order has been executed, the remaining legs can be modified, but cannot be cancelled.

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