Learn · Orders
Bracket order vs cover order explained
A bracket order places your entry, stop loss and target as a single package. A cover order places your entry and a mandatory stop loss together, without a target. Both are intraday-only and offer higher leverage because the stop is guaranteed at the order level.
In one line
A bracket order sends a three-legged intraday trade: the entry order, a stop-loss order, and a profit-target order, all simultaneously, so the position is automatically exited at whichever leg triggers first, while a cover order is a two-legged trade with an entry and a compulsory stop-loss but no automatic profit target.
BazaarBaaziSource & method
How a bracket order works
When you place a bracket order, you specify 3 parameters: the entry price (market or limit), the stop-loss level (as a distance in rupees or percentage below or above your entry), and the profit target (as a distance in rupees or percentage above or below your entry). The broker's system sends the stop-loss and target orders to the exchange simultaneously with the entry. As soon as the entry fills, both the stop-loss and target orders are live.
Whichever of the two pending orders triggers first cancels the other automatically. If your target hits, the stop-loss order is cancelled. If your stop is hit, the target order is cancelled. The trade is always closed within the session. Bracket orders are designed for traders who have a clear level-to-level thesis and want the exit handled automatically, removing the temptation to hold a losing position or exit a winner too early.
How a cover order differs
A cover order has only 2 legs: the entry order and a compulsory stop-loss order. There is no profit target leg. You enter the trade with a defined risk floor (the stop-loss is locked in at the order level), but you decide when to exit the profitable side manually. This gives more flexibility on the upside, since you can trail the stop or close manually at the best moment, but it requires you to actively manage the exit rather than letting the system do it.
The reason both bracket and cover orders offer higher leverage than plain MIS orders is the exchange-enforced stop-loss. Because the broker knows the maximum you can lose on the position (the distance from entry to stop times the lot size), they can extend more leverage without taking on unlimited risk. The stop is not moveable in a cover order (unlike a regular MIS stop, which is advisory), which is the trade-off for the leverage benefit.
Availability and practical limitations
Bracket and cover orders are available at some brokers but not all, and the exact implementation (whether the stop is exchange-level or broker-level) varies. Zerodha, for instance, transitioned from bracket orders to a modified framework over the years. Before assuming these order types are available, check your broker's current product offering, because the availability has changed as SEBI and exchanges have updated their margin and risk frameworks.
A practical limitation of bracket orders is that slippage can widen the actual stop distance in fast-moving markets. The stop leg is typically a trigger-then-market order, meaning in a gap or a fast move the fill can be worse than the trigger level. The bracket protects against runaway losses, but it does not guarantee the stop price. Understanding this distinction is important, especially for volatile stocks where gaps are common.
FAQ4 reader questions · AEO-eligible
Common questions on bracket vs cover order.
Are bracket orders available on Zerodha?
Zerodha's product offering for bracket orders has evolved over the years. Check the current Zerodha Kite product page or support documentation for the latest availability and mechanics, as the broker has modified its advanced order types in line with exchange and SEBI guidelines.
What is the advantage of a cover order?
A cover order offers higher intraday leverage than a plain MIS order because the compulsory stop-loss limits the broker's risk. It also enforces discipline by requiring you to pre-commit to a stop level before entering the trade.
Can I cancel the stop loss in a bracket order?
No. In a bracket order, the stop-loss and target legs are linked to the position and cannot be removed without exiting the trade. You can modify the price levels within the allowed range, but removing the stop entirely is not permitted.
Are cover and bracket orders for delivery trades?
No. Both are intraday-only order types. Positions must be closed before market close on the same day.
Keep learning
Adjacent concepts every Indian retail investor should have straight.
Hub
All explainers
Orders
What is a GTT order
A standing order that fires automatically when a stock hits your trigger price, without needing to watch the screen all day.
Orders
Intraday vs delivery
Two ways to trade the same stock, with completely different tax treatment, margin rules and risk profiles.
Risk
What is a stop loss
The single most important risk tool for a retail trader, and the common ways it goes wrong.
F&O
What is lot size
The minimum quantity you must trade in any futures or options contract, and why lot sizes change periodically.