I have few questions regarding the Bracket Orders. This is what zerodha says : "Place a limit order to buy/sell to enter a position, note that there is only limit order,
and if you intend to buy/sell at market, place an order with higher/lower limit price respectively."
Now, i want to know :
Suppose market price of XYZ is Rs 100 currently. As per the text above, if i want to place a bracket order
for buying 1 no of this equity, then do i have to put the price > 100 (say 102) ? Well what’s the logic ?
does it mean that my order will be executed only when the market price reaches 102 ? It sounds so
foolish. And if the order has to be executed at the market price, then what is the need to change the
price at all ? Clearly the price field should be grayed out !!
What about if i wish order should be executed when the price falls (lets say 90) ? As it happens in case
of usual target order. Is there any way to implement the same in case of bracket order ?
The text also says that bracket orders are limit orders. Then why on kite, there is also an option of
SL next to LIMIT ? @NithinKamath : Please make the interface of kite more clear. It’s so confusing.
Please clarify me experts.
Suppose current price being 100, you are ready to buy at 98, then only when it comes down to 98 you’ll be able to buy. This case its limit order. But if you are ready to buy at 102 then you’ll definitely buy at 100. This case its like market order.
No, at 100 only
Place limit as 90
That’s normal and single order, but bracket order is a set of orders, placing which you automatically place target and stop loss, when either is hit other is cancelled.
Thanks @leodecaps I got it. But in bracket order when i click “SL” button, i see the option “Price”.
Here what does the “Price” mean ? Is it the same Limit price that we see when we click the LIMIT button ?
or it means something else. Please clarify.
Dear @blazesprings Please keep in mind that Bracket Order is an extremely leveraged trading order. The margin money for BO is 1/6th or even less than normal margin money. So it’s a highly risky trade Order/Position. Because of higher risk Only Limit Order and SL (Stoploss Limit) Order is allowed here.
You have to put the price at next higher bid Or more. If the next higher bid is 100.50 then your Limit Order should be 100.50 and above to get the trade executed @market price. If the next higher bid is 99 and the current price is 100 then you have to put the price at 99 and above to get the trade executed at mkt price.
No. Your Order will be executed immediately at the next higher bid. The next higher bid may be 101 if the scrip is rising Or it may be 99 if the scrip is falling.
Then you have to place a Limit Order of 90.
SL means Stop-loss Limit Order. It’s a variant of Limit Order and it’s a very important tool for traders. Suppose you think the scrip will breakout above 102 and you want to buy it at 102 but you don’t want to buy beyond 104 then your Order should be SL order with Trigger at 102 and price at 104. The same thing will happen if you think the stock will take support at 98 and you want to buy at 98 and below but not below 96 (current price is 100). Then your Order should be Stop-loss Limit Order (SL).
Price field should be greyed out Think once…
Suppose the current price is 100. Your Target price is 106 and Stoploss is 98. You placed a Mkt Order (because Zerodha has greyed out the price field) and at the same moment a block deal happened Or a +Ve Company news came… the next higher bid became 105 and your Mkt Order executed at 105. Now profit booking started and continued till your Stop-loss at 98. Now your net loss will be around 7%. It means more than 3 times of your total BO margin. If you are holding multiple lots and no extra cushion of money in your Trading A/c then who will bear the extra 2 times of margin. Then you will definitely sue Zerodha for greying the price field and allowing Mkt Order in BO.
I have traded on Sharekhan, Motilal Oswal and SBI Smart… But I found Zerodha Kite interface the best. The simplest. Zerodha is like WhatsApp. The looks is simple and the changes are subtle but the platform is ROBUST.
Thanks @AkashKB for your reply. I have a thought taking the your example into consideration :
The scrip is trading at 100. I thought that there maybe a breakthrough at 102.
Now my doubt is that when i see the script may move up, then why should i not buy it at 100, i.e.
the market price instead of buying it at higher price (102) ?? Actually i am not able to get the practicality.
Could you please make me understand ? Thanks bro…
Dear @blazesprings The stock is trading @100 and you think there is a huge Resistance (technically) just below 102. Why Resistance… because there are lots of sell orders placed by old long position holders (long unwinding).
Again there are lots of short positions in the system below 102. Now you think if short covering Or short squeezing will continue and in case the price crosses 102 by surpassing the net sell orders by long position holders then there will be a Breakout which will take the price to 106 and more. Then you should buy the stock just above 102 instead of 100. Here the BO SL Order will be handy. Trigger Price 102 and Price @102.25 Or 102.50.
Suppose you bought the stock at 100 and heavy selling started between 100 & 102 due to huge long unwinding (Resistance) by HNI or FII or DII. Then your trade will be in loss. That’s why Professional Traders wait patiently for Break-out instead of buying immediately.
@AkashKB Ok bro… got it. Now suppose as per your scenario, the price has gone upto 106. What will happen to this limit order : Price = 90 SL = 10 TARGET = 20 pts TRAILING SL = 2. Will it get executed or rejected ?
@AkashKB bro, referring to your example, you said that fearing breakout at 106, i should buy just above 102 instead of 100. Suppose i am buying at 100, can you please elaborate how am i going to make loss ? Need to understand.