Understand bracket and cover orders — Hinglish notes

1.6.5 · Stock-Market › Order Types & Mechanics

YEH orders exist kyun karte hain?

Har disciplined trader entry se pehle do cheezein define karta hai:

Stop-Loss (SL) — woh price jahan aap maan lete ho ki aap galat the aur loss cut karo.
Target (Take-Profit) — woh price jahan aap gains book karo.

Ek Cover Order (CO) mein entry + ek compulsory stop-loss bundle hota hai.
Ek Bracket Order (BO) mein entry + stop-loss + target bundle hota hai, aur aksar ek trailing stop-loss bhi hota hai.

Cover Order (CO)

KIYA hota hai isme: bilkul do legs — entry leg + stop-loss leg. KYA nahi hota isme: ek built-in target (profit side se aap manually ya SL ke zariye nikalte ho).

Leverage zyada kyun hota hai: broker ki worst-case exposure $(E - S) \times Q$ tak capped hai, full share value $E \times Q$ tak nahi. Broker ko kam risk → woh aapko kam margin se zyada control karne dete hain.

Bracket Order (BO)

KIYA hota hai isme: entry + SL + target (+ optional trailing SL). Key rule — OCO: SL aur target One-Cancels-the-Other hote hain. Agar target hit ho, SL auto-cancel ho jata hai, aur vice-versa. Aap kabhi double-exit nahi ho sakte.

Figure — Understand bracket and cover orders

Worked Examples

Common Mistakes

Flashcards

Cover Order mein kitne legs hote hain aur woh kya hain?

Do — entry + compulsory stop-loss.

Bracket Order mein kitne legs hote hain?

Teen — entry + stop-loss + target (optional trailing SL).

Brokers Cover Orders par zyada leverage kyun dete hain?

Kyunki compulsory SL unki worst-case exposure

(E - S) \times Q

tak cap kar deta hai.

Bracket Order mein OCO ka matlab kya hai?

One-Cancels-the-Other: agar target hit ho toh SL cancel ho jaata hai, aur vice-versa.

Long Cover Order par max loss ka formula?

(E - S) \times Q

Long Bracket Order ka reward-to-risk formula?

(T - E) / (E - S)

Long ke liye trailing stop kaise update hota hai?

S_{n e w} = max (S_{o l d}, P_{ma x} - d)

— sirf upar ratchet karta hai.

CO/BO mein se target kisme hota hai?

Sirf Bracket Order mein.

BO aur CO intraday hain ya delivery products?

Intraday — close se pehle auto squared-off.

Ek BO: E=200, S=196, T=208. R:R kya hai?

(208 - 200) / (200 - 196) = 8/4 = 2

Recall Feynman: ek 12-saal ke bacche ko explain karo

Socho tum roller-coaster par ho lekin shuru hone se pehle do rules set kar sakte ho: "Agar yeh itni height tak upar jaye, ruko aur mujhe khush karke utaaro" (yeh target hai), aur "Agar yeh itne neeche gire, ruko aur mujhe darney se pehle utaaro" (yeh stop-loss hai). Ek Cover Order sirf scary-stop set karne deta hai. Ek Bracket Order DONO stops set karne deta hai — aur ride chadhte waqt scary-stop ko upar bhi slide kar sakta hai, taaki jo fun tumne already liya hai woh hamesha tumhare paas rahe.

Connections

Market and Limit Orders — woh raw building blocks jinhe CO/BO wrap karte hain.
Stop-Loss Orders — SL leg under the hood ek stop-loss order hai.
Leverage and Margin — capped risk aapko zyada buying power kyun dilata hai.
Risk-Reward Ratio — $R : R$ metric jo BO enforce karta hai.
Intraday vs Delivery Trading — CO aur BO dono sirf intraday products hain.
Position Sizing — max-loss formula directly feed karta hai ki kitne shares kharidne hain.