What is a bracket order and how can I use it?
A bracket order is a combination of a stop loss order to reduce your loss and a book profit order to take profits. This is placed along with the main order in the same order form.
When the 1st leg of your order gets completed, stop loss or book profit order gets placed immediately. When either of stop loss or book profit order is completed then the order is cancelled automatically.
For example: You want to buy a stock at Rs.100 and to reduce loss you want to place a stoploss order Rs.2 below the buying price and want to book profit at Rs.4 above the buying price. To do so you can place a buy order at Rs.100 with a stoploss at Rs.98 and book profit at Rs.104.
Since, stop loss and book profit order is placed immediately, this can also result in multiple stop loss or book profit orders getting placed when the 1st leg of the order is completed in tranches. For example:
11:10:00 | Placed an buy order of quantity 100 | |
11:10:01 | 30 quantity got traded | Stop loss and book profit orders will be placed for quantity 30 |
11:10:59 | 20 quantity got traded | Stop loss and book profit orders will be placed for quantity 20 |