What is the difference between cover order and bracket order?
The price of stocks in the stock market see a lot of fluctuation. In
the blink of an eye, the stock price can
take a turnaround. Thus, it becomes difficult to track every movement of the
market. If the desired price does not
come in the eyes of the investor, it can lead to lesser profits or higher
losses. Thus, tracking stock price movement is essential.
To overcome this problem, brackets order is of great help. It helps to manage the risk of the investor. With
bracket order in place, the investor can
book profits and exit the stock in a timely manner. Let us understand the term
bracket order in detail.
What is Bracket Order
Bracket order is a single click order type that allows the traders
to place 3 orders at a single time.
The first order is the main
order i.e. buy or sell.
The second order is placing the
stop loss, and
The third order is profit
By placing all the 3 orders, the trader secures his intraday position
in the stock.
When the investor put the stop
loss in the bracket order. His loss is limited up to a bearable state.
Similarly, when the target
price for any stock is achieved, the stock is automatically sold and profit
is booked. Let us take an example to understand bracket order in a better way.
Example of Bracket Order
Suppose a trader is willing to buy shares of Reliance Industries. He
wishes to place a bracket order. In such scenario. The first order shall be the
purchase of stock, say Rs. 900. Now, he wishes to place a stop less, say Rs.
885. The third order in the bracket order shall be profit booking price, say
Rs. 935. Here the investor’s shares will be sold if the price of Rs. 885 is
hit. In addition, if the price of the share
goes on to touch Rs. 935, the profit shall be booked.
Nest we shall under the term “trailing stop-loss order”. The term ‘trailing stop-loss order’ is important when it
comes to bracket order. Let us learn its meaning.
What Is a Trailing Stop Loss in Day Trading
When the investor places a bracket order, he has two options i.e.
either to place a fixed stop loss or trail the stop loss. Trailing stop loss
order is placed when the price of the stock moves in the certain direction. In such cases, the stop loss
can be changed either on the upside or downside based on the long or short
It has been noticed that often the meaning of ‘bracket order’ is
confused with ‘cover order’
What is Cover Order
Cover order is an
order type in which two orders are placed at a single time. The first order is
the buy or sell order. While the second
order is putting a compulsory stop loss.
The cover order ensures that a stop loss is always in place and no order
shall be placed without a stop loss. The cover order requires a stop loss that
reduces the risk of the client. The client’s loss remains under control.
Eventually, the margin requirement also reduces.
The cover order is different from bracket order as it has two orders
i.e. the main buy or sell order and putting the loss. On the other hand,
bracket order comprises of three orders that are placing the buy or sell order,
putting the stop loss and putting a profit-booking price.
Securities is one of the prominent financial service providers. The wide range of services includes trading in equity, derivatives,
commodity, currency, etc. Our in-house experts and professionals keep
recommending stocks to the clients. We try to maximize our client’s profit with
the help of bracket order and cover order. We suggest them the right support
and resistance levels to place the orders. Furthermore, our clients have the privilege to avail our services
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