What is the difference between cover order and bracket order?

What is the difference between cover order and bracket order?

Both cover orders and bracket orders are types of advanced order types used in trading, which allow traders to manage their risk and optimize their trading strategy. However, they have some key differences:

Cover Order: A cover order is a two-legged order type that consists of a market order and a stop-loss order. The market order is used to enter a new position in the market, while the stop-loss order is used to limit the loss if the market moves against the trader. The stop-loss order is placed automatically by the system when the market order is executed. Cover orders are typically used by traders who want to limit their losses while taking advantage of the volatility in the market.

Bracket Order: A bracket order is also a two-legged order type that consists of a limit order, a target order, and a stop-loss order. The limit order is used to enter a new position in the market, while the target order is used to take profits if the market moves in the trader's favor. The stop-loss order is used to limit the loss if the market moves against the trader. Bracket orders are typically used by traders who want to take advantage of both upside and downside potential while limiting their losses.

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