Bracketed Orders - Information
Bracketed orders are used to limit trading risk and to lock profit by creating a bracket in both directions. Bracket orders come handy when the trader is not sure about the price trend of stock, or he lacks the time to monitor the stock market, or he is trading on news and rumors. Bracketed orders are of two types - bracketed buy orders and bracketed sell orders.
Bracketed buy orders are orders having an upper sell limit and lower stop-loss limit. On reaching either price level, broker triggers the order execution. For example, trader can place a bracketed buy order for XYZ stocks at $10, and can place a sell limit order at $12 and stop-loss order at $8. Thus once executed the trader will have $2 profit or loss. But remember, once triggered stop-loss orders are executed as market orders, thus can be traded for lower prices than stop-loss price, resulting in more loss.
Bracketed sell orders are orders having an upper buy stop limit and lower buy limit. On reaching either price level, broker triggers the order execution. For example, trader can place a bracketed sell order for XYZ stocks at $10, and can place a buy stop order at $12 and a buy limit order at $10. Thus once executed the trader will have $2 loss or profit.
Bracketed buy orders are orders having an upper sell limit and lower stop-loss limit. On reaching either price level, broker triggers the order execution. For example, trader can place a bracketed buy order for XYZ stocks at $10, and can place a sell limit order at $12 and stop-loss order at $8. Thus once executed the trader will have $2 profit or loss. But remember, once triggered stop-loss orders are executed as market orders, thus can be traded for lower prices than stop-loss price, resulting in more loss.
Bracketed sell orders are orders having an upper buy stop limit and lower buy limit. On reaching either price level, broker triggers the order execution. For example, trader can place a bracketed sell order for XYZ stocks at $10, and can place a buy stop order at $12 and a buy limit order at $10. Thus once executed the trader will have $2 loss or profit.
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posted by Daniel Pipitone at
5:04 AM
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