In the stock market, traders often look for ways to control both profit and loss without constantly watching the screen. That’s exactly where a bracket order comes in. A bracket order is a type of advanced trading order that allows you to set your target profit and stop-loss at the same time you enter a trade. It’s designed to help traders manage risk and automate exits in fast-moving markets.
In this blog, we’ll explain what is bracket order, how it works in simple terms, and why it’s one of the most reliable tools for intraday traders in India.
A bracket order, often called BO (the BO full form in share market is Bracket Order), is a special type of trading order that helps you manage both profit and loss automatically. In simple words, when you place a BO order, you’re not just buying or selling a stock; you’re also telling your broker, “Book my profit here and cut my loss there.”
Think of it like setting a fence around your trade, one side limits your losses (stop-loss), and the other side locks in your profits (target). This “bracket” makes sure your trade stays within safe limits, even if the market moves quickly.
For example, imagine you buy a stock at ₹100 using a bracket order. You can set a target at ₹105 and a stop-loss at ₹98. If the price hits ₹105, your trade automatically sells and books a profit. If it drops to ₹98, your loss is cut automatically so no need to panic or keep watching the screen all day.
When you place a bracket order (BO) in the stock market, your broker first sends your entry order to the exchange. The moment it is executed, two additional linked orders are generated automatically, one for booking a profit and another for limiting a loss. These two remain pending until the price reaches either level. This setup is referred to as a “linked order chain.” It means that all three orders —entry, target, and stop-loss are tied together and can’t exist independently.
Let’s go beyond the basics. When you enter a trade with ₹100 as your buy price, a bracket order creates a structure where your broker’s system actively monitors price movement in milliseconds. Once the stock hits ₹105, your profit order is instantly sent to the exchange, while the stop-loss at ₹98 is cancelled within microseconds. This cancellation isn’t manual; it’s an automated instruction built into the order type.
The margin you see blocked in your trading account is not random either. Your broker calculates it based on your stop-loss distance. A tighter stop-loss (for example, ₹99 instead of ₹98) means lower risk, so the margin required is smaller. A wider stop-loss increases your potential risk, so the margin requirement rises.
Ever seen an error like “RMS Rejection: Bracket Order not allowed” or “Insufficient Margin for BO”? That happens when your broker’s Risk Management System (RMS) detects high volatility or low balance. During sudden market swings or major announcements, brokers may temporarily block BOs to prevent erratic fills.
Additionally, since BOs are intraday-only, the system requires sufficient time to settle before the market closes. If you try to place a BO too close to 3:00 PM, most brokers won’t accept it.
A bracket order (BO) in the stock market isn’t just a convenience feature; it’s a smart trading tool designed to make your trades more disciplined, less emotional, and easier to manage. Here are some of its most important advantages for traders, especially in intraday trading.
While a bracket order offers excellent control and automation for traders, it’s not perfect. Like any trading tool, it comes with certain drawbacks and limitations that every trader should understand before using it.
A cover order (CO) and a bracket order (BO) may seem similar at first glance; both involve setting a stop-loss to limit risk, but they serve different purposes. The main difference is that a cover order only includes a stop-loss, while a BO order includes both a target and a stop-loss along with your main order.
| Feature | Cover Order (CO) | Bracket Order (BO) |
|---|---|---|
| Order Type | Includes entry and stop-loss | Includes entry, stop-loss, and target |
| Purpose | To protect from heavy losses | To manage both profit and loss automatically |
| Flexibility | Easier to modify | Less flexible once placed |
| Risk Management | Partial (only downside protected) | Complete (both sides protected) |
| Margin Requirement | Slightly higher | Lower, due to the predefined stop-loss |
| Auto Square-Off | Yes, intraday only | Yes, intraday only |
| Allowed Segments | Equities and Futures | Mostly Equities and Futures (not Options) |
Yes, you can cancel a bracket order (BO) — but the process and outcome depend on whether your main order, target, or stop-loss has already been triggered. A BO order in the stock market consists of three linked parts, so cancelling one affects the others.
Although bracket orders make trading easier, traders often encounter errors that can be confusing. Here are the most common ones explained clearly, along with simple fixes.
This error comes from your broker’s Risk Management System (RMS). It usually means your margin balance is too low or the stock you’re trying to trade is temporarily restricted for BOs.
Quick Fix:
This message simply means your main order has been executed, but the stop-loss order hasn’t been triggered yet. It’s waiting for the price to reach the specified trigger level.
Quick Fix:
This happens when the market price moves too quickly and your order can’t get filled at the requested price.
Quick Fix:
A bracket order is one of the most useful tools for traders who want both protection and precision in their trades. It allows you to define your profit target and stop-loss in advance, removing the stress and emotions from trading decisions. For beginners, it’s a perfect way to build discipline and confidence in the stock market. Before using it with real money, try them out in paper trading to understand how they behave in different market conditions.
The BO full form in the share market is Bracket Order. It’s a type of order that lets traders set both a target price and a stop-loss together, helping to manage risk and secure profits automatically in intraday trading.
The bracket order meaning in trading refers to an advanced order type that places three linked instructions — the main order, the target order, and the stop-loss order — at the same time. This setup ensures your trade is protected from large losses while aiming for defined profits.
Currently, most brokers in India do not allow bracket orders in options trading due to high volatility and unpredictable price gaps. They are mainly offered for equity intraday and futures segments where risk is easier to manage.
Once you place a bracket order, modifications are limited. You can exit or cancel the entire order, but changing the stop-loss or target usually requires cancelling the existing BO and creating a new one with updated levels.
For beginners, a bracket order is often the better choice because it manages both profit and loss simultaneously. A cover order only includes a stop-loss, while a BO order provides a complete risk-control system, ideal for learning disciplined and safe trading.
Disclaimer: This article is intended for educational purposes only. Please note that the data related to the mentioned companies may change over time. The securities referenced are provided as examples and should not be considered as recommendations.
