Definition
Bracket Order
A bracket order is an intraday order that simultaneously sets a target (profit) and a stop loss around your entry, automating the exit on both sides.
When you place a bracket order, you specify the entry price, a target to book profit, and a stop loss to cap losses. Once the entry executes, the system automatically places both exit legs; whichever triggers first cancels the other (a one-cancels-other structure).
Bracket orders are strictly intraday and often come with higher leverage. They suit disciplined day traders who want predefined risk-reward without manually watching the position, but note that many brokers have curtailed them after SEBI's intraday leverage rules.
Related terms
- Cover OrderA cover order is an intraday order placed together with a compulsory stop loss, limiting your maximum loss from the outset.
- Stop LossA stop loss is a pre-set order that triggers an automatic sell (or buy, for shorts) once a security hits a chosen price, capping your loss without you having to watch the screen.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.