Get the force of much higher influence, with expanded assurance, furthermore guaranteeing that no profitable position transforms into a loss! Zerodha is the first broker in the nation to introduce Zerodha Bracket Order for retail clients with an extra option of Trailing Stop Loss. BO is there for both Equity and Futures and Options.
An important addition
I posted this article in 2019 for the first time. It was before the Covid meltdown. Since then a lot has changed. SEBI brought new rules of compliance. Margin funding became a big issue. SEBI stopped margin funding after the Covid effect. Sudden and repetitive falls in the market made margin funding more difficult. As we know, the Bracket Orders ask for more amount of margin funding, the new margin rules do not allow such leniency. So at the end of the article, we will talk about what we can do regarding BO post the new compliance rules.
As I have discussed in the previous paragraph, this article was apt for trading in 2019. BO was very effective and beneficial to the traders of the Indian Stock market. In Zerodha the Bracket Orders were very popular. Even the other brokers also started providing this facility. We will talk about the 2021 scenario later.
Bracket Order FAQ
A bracket order is a special type of order where a trader can put the target and stop loss in the same order. Therefore the advantage of bracket order is that here the mental attachment is very less for a trader. Simply put the target and stop loss in the same order and leave the terminal. One way OR the other the market will move. Either it will hit the target OR it will hit the stop loss. If the target gets hit the stop loss order will be canceled automatically and if the stop loss gets hit the target order will be canceled automatically.
A bracket order or BO is a special type of trading order where you can enter into a position alongside a target/profit-taking and a stop loss trading order. When the main trading order is executed the framework will put in two more trading orders (target and stop-loss). At the point when one of the two trading orders (target or stop loss) gets executed. Hence the other trading order will get wiped out consequently.
You need to select a stock or future in your market watch and right-click on it. There you can select Bracker Order and in its sub-menu, you can select a Buy Bracket Order or a Sell Bracket Order. Check the image below to understand the procedure.
When you put in a bracket trading order, you get a choice to either put in a fixed stop loss trading order. Else additionally a capacity to trail your stop loss. Therefore, this would mean is that if the stock or future moves toward you by a specific number of ticks, the stop loss will go up/down in light of the event that you are long or short naturally. A tick is a minimum value a specific stock/contract can move. So 1 tick on Nifty is 0.05.
The Bracket Order is an Intraday system. Hence all BO positions will be squared off by 3:20 PM. So, this order type can not be converted to CNC as this is typically an intraday product
Bracket Order on Zerodha Pi Platform
Submitting a BO in Zerodha Pi
- Buy Bracket Order Entry: Shift+F3
- Sell Bracket Order Entry: Shift + F4
- OR right-click on the scrip to pick Bracket Order Entry
See the second picture above. If I place this order, the system will automatically place a limit buy order at 8469.25. As I have mentioned the target is 20 points and the stop loss is 10 points. So once my buy order is filled at 8469.25, the system will automatically place two more orders. Therefore, one is a profit-taking sell order at 8469.25+20 = 8489.25 and another stop-loss sell order at 8469.25-10 = 8459.25.
Also, I have also mentioned the trail SL as 200 ticks. Nifty’s minimum tick size is 0.05. Hence 200 tick = 200 x 0.05 = 10 points. So once the price moves in my direction by 10 points the SL will automatically be trailed by 200 ticks or 10 points. Therefore once the price reaches 8469.25+10 = 8479.25 the stop loss will be trailed to 8459.25+10 = 8469.25, i.e. my buy price. In case the price hits 8489.25, i.e. my target the stop loss order will automatically get cancelled. Or, if the price hits the stop loss the target order will automatically get cancelled.
Bracket Order on the Zerodha Kite Platform
Many traders are now aware of the BO facility Zerodha Kite.
Time needed: 1 minute.
How to put Bracket Order on Zerodha Kite?
- Login to Kite
First of all, open Kite by typing kite.zerodha.com in your web browser or open the kite app in your mobile. Log in with your client id and password.
- Selecting the stock or future in your Market Watch
Next, you need to select your Market Watch and select the script you want to trade. Put the mouse on the scrip and the BUY / SELL option will be visible as shown in the image below.
- Buy Bracket Order
Select BUY if you want to buy the scrip and it will open up the BUY order window. Now, click on more options and you can see 4 options – Regular, BO, CO, AMO. Click BO and you are on the BUY bracket order screen. Put quantity, price on the first line and stop loss (in points in multiples of 1) and target (in points in multiples of 1) and click on buy. Thus, it will create the BUY order and send it to the exchange. Optionally you can put and trailing stop loss (in points in multiples of 1).
- Sell Bracket Order
For a sell bracket order, you need to choose SELL in point number 3 in the list above. So, remember for a BUY bracket order the target price should be higher than the market price and the stop loss should be lower than the market price AND for a SELL bracket order the target price should be lower than the market price and the stop loss should be higher than the market price.
The Margin Advantage in BO
Bracket Order positions get you much higher leverage. Leverage can go up to 1:20 in equity and 1:55 in FNO. Hence, this is an added advantage of bracket orders. Also, you can also cover the danger of loss by the mandatory Stoploss that you place while entering a position. Therefore, the margin needed would be taking into account the quantum of your SL, and in the scope of 1.5% to 2.5% of the whole contract size.
The 2021 Scenario
As I explained earlier, the previous part of this content was applicable before the Covid situation. But the perspectives have changed. Now the traders are trading in the post-Covid scenario. A lot has changed since March 2020. During March 2020 all were going like a well-oiled machine when the Covid situation struck India suddenly. The market started falling. It was like a bottomless fall across the world. Traders didn’t have any clue. Therefore, the people had to stop using margin funding. After the hangover was over, SEBI came out with a new set of margin compliance, as we all are aware of.
The new rule says nobody can provide any kind of carry forward margin. The intraday margin has come to 50% only for cash and FnO. Hence, all tools that provided margin facilities are gone. So also BO and CO. Therefore the Zerodha bracket order went out of existence. Because the leverage facility is not there any more.
Latest Alternative to Zerodha Bracket Order
In absence of the BO in Zerodha, traders could feel the difference. Leverage went out of the system. Alice Blue started providing this facility. But recently, probably from March, 21, Alice Blue has also stopped this facility.
Now we have only two wherefrom you can get such leverage albeit in a different format. The first one is Angel Broking.
In Angel Broking we have a facility called Robo order.
On Robo order of Angel Broking, you can get the facilities like that of Bracket Orders. In such a format, you get high leverage. But this facility is available in their mobile app. In the image above there is a Youtube video posted by Angel themselves. They have very well explained how to place an order in Robo order and how to get leverages through Robo order.
And then we have Nesostox.
Neostsox is a different kind of platform for auto trading. You firstly become a subscriber to Neostox. Then you need to attach your own broker to the trading system of Neostox. Neostox is not a broker. Hence you can not trade through them. Therefore for trading through the trading system of Neostox, you need to attach your broker to their trading platform. Neostox gives you a different facility that is not exactly like the conventional Bracket Orders. When you place an order with Both target and stop-loss, your broker accepts the order but they do not remain in the system. Neostox executes the trade for you whenever your target is reached or stop-loss is hit. The system does that automatically whichever price comes earlier. But besides that, it works like standard BO, as we have seen with Zerodha Bracket order.
A few words in the end
There are thousands of traders in the Indian stock market who are not able to take the BO facility in the present days. Though I post this article for these traders, I know still there will be many who dearly miss this facility. Traders used to get a great advantage through BO. The absence of it has left many stranded. And add to that, the new margin compliance rules. The retail traders are feeling the heat of it. I hope SEBI will soon look into these obstacles for the retail traders and come up with some solutions. Till then we all have to manage the way I just explained.