Help With 'Bracket Orders'

Discussion in 'Strategy Development' started by TOM134, Apr 27, 2007.

  1. TOM134


    I don't quite understand how to place a bracket order.

    The explanation below is too vague.

    Any help would be appreciated.



    "Bracket orders are designed to help limit your loss and help lock in a profit by "bracketing" an order with two opposite-side orders using the same quantity as the original order."
  2. JackR


    You enter an order to buy (or sell short) a stock at either a limit or at the market. However, you use a "bracket order" to do so. It is a form of conditional order that, if completed, will open two sell (or buy if you went short) orders bracketing your entry price. If either of the bracket sides is hit the other will be cancelled.

    For example:

    You enter an order to buy 100 XXX at the market. Your bracket order has been setup to open a stop at +/- 5 points from your entry.

    You get filled at 25. Upon being filled the trading platform you are using sets up two stops, one to sell 100 XXX at 20, the other to sell 100 XXX at 30. When one hits, the other is canceled.

  3. TOM134



    Much appreciated.

    Seems pretty neat.

    I'm wondering how this type of order could be optimized into some sort of trading strategy?

    Why not just use trailing stops on either side of the quote?

  4. JackR


    Bracket orders are good for fast moving markets. They are automatically opened when your position is opened. The example I gave had a rather wide range.

    Depending on the platform you are using the brackets can be set to trail, be asymmetrical, set to sell half at one level, half at another, you name it.
  5. TOM134




    Sound's too good to be true!

    One could set a trailing bracket order at quote X and designate +/- dispersion $.

    Then, once the trade takes a direction, quickly cancel the anti-directional part of the order; and then walk away with a profit!

    Can't get any better then this.

    Don't say I never gave anything to the Elite Trader community.

  6. Tom, I'm not sure you understand how the bracket order works.

    You have to choose a market direction ( buy or sell ), then once THAT order triggers, the brackets get set automatically, one to take profits if the market goes your direction and the other as a stop loss if the market goes against you.