Understanding Bracket and Cover Orders: A Complete Guide for Risk-Smart Trading

When it comes to trading in volatile markets, managing risk is crucial. Bracket Orders and Cover Orders are two key order types that help traders automate risk management while maximizing potential returns. Let’s understand the difference between the two and how RMoney clients can benefit from them using the RMoney Rocket platform.

What is a Bracket Order?

A Bracket Order (BO) is a type of advanced order that includes three parts:

• Main Order: Your entry into the trade (buy or sell).
• Target Order: The price at which you want to book profits.
• Stop Loss Order: The price at which your position will be squared off to limit losses.

These three orders are bracketed together—hence the name.

Example:

Let’s say you want to buy TATA Motors at ₹920.

• You place a Buy BO at ₹920.
• You set a Target at ₹950.
• You set a Stop Loss at ₹905.

Once your main order (₹920) is executed, both the target and stop loss orders are automatically placed. Whichever hits first, the other is canceled automatically.

Key Features:

• Multiple orders managed in one go.
• Auto-cancellation of the opposite order once one is executed.
• Useful for both intraday and quick swing traders.
• Leverage availability based on the stock and exchange.

What is a Cover Order?

A Cover Order (CO) is a type of intraday order that includes:

• Main Order: Market or limit order for entry.
• Stop Loss Order: A mandatory stop loss is placed simultaneously to cover potential losses.

Unlike BOs, COs do not include a target price. You’ll need to exit manually or let it hit stop loss.

Example:

You decide to sell Nifty Futures at ₹22,400 with a stop loss of ₹22,500.

• You place a Sell CO at ₹22,400.
• System prompts for a Stop Loss between ₹22,410 and ₹22,500.
• Your position stays open until you exit manually or SL hits.

Key Features:

• Mandatory stop loss makes it safer than naked intraday orders.
• Offers higher margin/leverage than regular intraday orders.
• Cannot define target; exit must be manual or via square-off.
• Fast execution ideal for scalpers and high-frequency traders.

Bracket vs Cover Order – Key Differences

Why Use BO/CO with RMoney?

Deep Discount Brokerage Plans
With RMoney’s ₹999 trading plan, you can place multiple BO/CO trades without worrying about per-order charges. Check RMoney’s Zero Brokerage Plan here

Free & Fast Trading APIs
For algo traders or tech-savvy users, RMoney offers free APIs for seamless integration of BO/CO into automated strategies.

Dedicated Support Desk
From order-related queries to margin requirements, our support team is always available to guide you.

Final Thoughts

Both Bracket and Cover Orders are designed to protect your capital and streamline intraday trading. While Bracket Orders suit those who want a structured entry-exit plan, Cover Orders offer a leaner setup with quick execution and high leverage.

Use them smartly based on your risk appetite and trading style—and if you’re an RMoney client, you already have the right tools at your fingertips.

For more information, contact RMoney at 0562-4266600 / 0562-7188900 or email us at askus@rmoneyindia.com and Kickstart Your Investment and trading journey effortlessly with RMoney. Open your Demat Account today and take the first step towards smarter investing and trading!