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A bracket order and cover order are two types of intraday orders that traders can place to limit their losses. Both orders include an initial order of buy or sell. However, a bracket order has two additional reverse orders, while the cover order has just one additional order. With bracket order, you can plan your profit and loss, while you can mitigate your risk with a cover order. This article covers the concept of bracket order vs cover order.
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Bracket Order vs Cover Order
The following tables explain each aspect of bracket order vs cover order in detail:
| Basis of Difference | Bracket Order | Cover Order |
| Meaning | A three-legged order that includes – initial order, stop-loss order and target order. | A two-legged order that includes initial order and a compulsory stop-loss order. |
| Significance | Plan profit and loss. | Mitigate risk. |
| Availability | NSE and BSE | NSE |
| Applicability | Cash Futures and Options | Equity Futures and Options Not Applicable on Stock and Currency Options |
| Squaring off the Order | If the initial order isn’t executed, the broker cancels the complete bracket order and will not be carried over to the next day. | If the stop loss is not triggered, the broker squares of the position leading to lower capital losses |
Frequently Asked Questions
A trailing stop loss is an order through which a trader can specify a maximum amount or percentage loss you are willing to take on a trade. The trigger price increases or decreases according to the movement of the security price.
Depending on the type of trade, a trailing stop loss order sets the stop price at a fixed percentage or value above or below the stock’s market price.
Yes, it is mandatory to mention the Book Profit price in Bracket Order.
Yes, the bracket order is available for NSE as well as BSE in India.
No, a cover order is not available for all exchanges. It is not available on the Bombay Stock Exchange (BSE).
The validity of the Cover Order and Bracket Order is 1 day. At the end of the trading day, both orders are either executed or closed.
A bracket order and cover order are two types of intraday orders that traders can place to limit their losses. Both orders include an initial order of buy or sell. However, a bracket order has two additional reverse orders, while the cover order has just one additional order. With a bracket order, you can plan your profit and loss, while you can mitigate your risk with a cover order.
Yes, you can modify your orders. However, you can modify your order until it is under open orders. Furthermore, you cannot cancel either a cover order or a bracket order.
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