We have introduced newer platforms since this post was published. The way a bracket order works is similar on all platforms. We have recently added SL entry for bracket orders so you can enter a position below or above the current market price. Check out this user manual for Kite and Kite explainer videos here.
Get the power of much higher leverage, with increased protection, and also ensuring that no profitable position turns into a loss! We are the first brokerage in the country to be launching Bracket Orders for retail traders with an option of Trailing Stop Loss, for both Equity and F&O (BO is presently available for NSE, NFO, and CDS. Other exchanges will be available later).
A type of order where you can enter a new position along with a target/exit and a stoploss order. As soon as the main order is executed the system will place two more orders (profit taking and stoploss). When one of the two orders (profit taking or stoploss) gets executed, the other order will get cancelled automatically.
When you place a bracket order, you get an option to either place a fixed stoploss order, or also an ability to trail your stoploss. What this would mean is that if the contract/stock moves in your direction by a particular number of ticks, the stoploss will go up/down based on if you are long or short automatically.
A tick is the minimum a particular stock/contract can move. So 1 tick on Nifty is 0.05
Important things to know
- This is an Intraday product, so all Bracket Order (BO) positions will be squared off around 3:20 PM. You cannot carry forward bracket order positions to the next day.
- Enabled across Equity, Futures & Options and Currency. Bracket order is not allowed for Commodities.
Placing an Order
To place a Bracket Order on Kite, you have to open up the regular order form by clicking B/S on the scrip or selecting the scrip and keying in B/S. Once the regular order form is open, you choose Advanced and select BO at the bottom row as shown in the image below.
To place a bracket order on other platforms like Pi or Nest:
Buy Bracket Order Entry : Shift + F3
Sell Bracket Order Entry: Shift + F4
Or right click on the scrip to choose Bracket Order Entry
Flow: Order Placement & Execution
Step 1: Place a limit order to buy/sell to enter a position, note that there is only limit order, and if you intend to buy/sell at market, place an order with higher/lower limit price respectively.
Step 2: Place a Target/Square off by choosing either Ticks or Absolute
- Ticks, 1 Tick = 0.05 for Nifty, so 20 ticks means 1 point on Nifty, 200 ticks is 10 points on Nifty
- Absolute, If you click on this option, you mention your target based on how many absolute points, 1 point = 20 ticks, so if you mention 10, it will mean 10 points profit on Nifty, and similarly if you mention 20 it will mean 20 points profit.
Step 3: Place a fixed stoploss order by choosing either Ticks or Absolute as explained above. So if you want a 10 point stop mention 200 ticks or 10 if you click on absolute.
Step 4: Instead of having a fixed stoploss, if you want the stop loss to trail, that is automatically go up/down when the contract moves in your direction, click on trailing SL and along with the SL mention trailing ticks. Trailing ticks will be the movement of the contract/stock for which the SL will change.
Let me explain this with an example, Nifty is at 6807, I decide to short expecting some retracement, my target is 400 ticks (20 points – 6787) and stop loss is 200 ticks (10 points – 6817).
If I placed a fixed stoploss and if Nifty goes to 6790 and comes back up, the stop at 6817 will stay, and even though I might have seen profit on this trade, might end up making a loss if Nifty hits my stop.
If I choose Trailing Stoploss of 200 ticks (10 points) and select Trailing ticks as 40 (2 points). What this would mean is that when Nifty moves from 6807 to 6805 (2 points movement in your direction), automatically the stop will go from 6817 to 6815, similarly if Nifty goes from 6807 to 6804, the stop loss would stay at 6815 because the movement is only 3 points. If the movement was 4 points, it would move to 6813. So if I had used a trailing SL, when markets went to 6790 my SL would now have been 6800 which would get executed on the way up and conserving my profits.
See the image below, you can also click on absolute in the order window instead of ticks, so the same example as above if you have clicked on absolute, target would be 20 and SL 10 with trailing 2. So 20 points below your selling is the target, SL of 10 points of your selling price, and for every 2 point movement of Nifty in your favor, the SL will trail.
An example below on using BO with the absolute option, shorting at 6842:
Modifying & Exiting a Bracket Order
You can modify the target and SL by clicking on modify button on the order book (F3).
You can exit open bracket order positions by either clicking on Target or SL and clicking Exit or modifying either Target or SL to market price.
Minimum Trailing SL for your Target
Equity F&O Currency
Absolute : 1 or Ticks 20 Absolute : 1 or Ticks 20 Absolute : 0.0500 or Ticks 20
Bracket Order positions get additional leverage since the risk is covered by the compulsory Stoploss that you place while entering a position. The margin required would be based on the quantum of your SL, and in the range of 2 % to 2.5% of the entire contract value.
Let me explain, in the above example if I shorted Nifty at 6800 that would mean a contract value of Rs 3,40,000 ( 6800 x 50).
Margin requirement would vary from (2 % to 2.5% of Rs 3.4lks), which is Rs 5100 to Rs 8500 based on your stoploss. As long as your stoploss is less than 102 points (Rs 5100), margin required would be Rs 5100, if your stop loss is 150 points the margin required will be Rs 7500 (150 x 50), and if your stop loss is anything more than 170 points the margin required would not increase above Rs 8500.
Check out the Margin Calculator for Bracket/Cover orders.
Latest update: 16th July 2014: Bracket order facility is currently available only for Nifty and Bank Nifty options only. Also we are allowing intraday leverage for option buying as well. 140% for Nifty and Bank nifty options, so to buy an option at Rs 100, you will need only Rs 70 in your account.
*Also note that if the entry order is executed in multiple trades, SL and target orders will be placed separately for each trade and billed per executed order.
*Bracket orders shouldn’t be used in pre-market open, between 9 am to 9.15 am
*Bracket orders cannot be placed/modified by the dealers at Zerodha.
Bracket orders until now has been privy to institutions, and it might take a little time getting used to. I’d advise you all to take it easy until you are all comfortable with it. At Rs 5000 per lot on Nifty for a contract value of Rs 3.4lks, that is a whopping leverage of almost 70 times, use it sparingly and wisely. Also do place a few practice orders with small quantities to get a hang of how they work.