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Bracket Orders

 


  
 
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Open Users' Guide

Bracket orders are designed to help limit your loss and lock in a profit by "bracketing" an order with two opposite-side orders. A BUY order is bracketed by a high-side sell limit order and a low-side sell stop order. A SELL order is bracketed by a high-side buy stop order and a low side buy limit order.

The order quantity for the high and low side bracket orders matches the original order quantity. By default, the bracket order is offset from the current price by 1.0. This offset amount can be changed on the order line for a specific order, or modified at the default level for an instrument, contract or strategy using the Order Presets feature in Global Configuration.

 

 

Example

 

Order Type In Depth - Bracket Order

 

 

  • Step 1 – Enter a Limit Buy Order

    Bracket orders are an effective way to manage your risk and lock in a profit on an order that has yet to execute. In this example, you want to buy 100 shares of XYZ stock, which has a current Ask price of 30.00. You expect the price to fall to 25.00, then rise to 30.00. By attaching a bracket order, you do not have to return to reevaluate and manage the risk of a position if the Limit order to buy at 25.00 per share is executed. 

    You click the Ask price of XYZ stock to create a Buy order, then enter the quantity and order type, then enter 25.00 as your Limit price. You do not transmit the order yet because you want to attach a Bracket order.

    Assumptions
    Action BUY
    Qty 100
    Order Type LMT
    Market Price 30.00
    Limit Price 25.00
     
     
     
     
     
     
     
     
     
  • Step 2 – Attach a Bracket Order

    To attach a Bracket order to your Limit Buy order, right click the order row, then select Attach > Bracket Order. A Limit Sell and a Stop Sell order now bracket your original order. You enter 30.00 as the Limit price for the attached Limit Sell order, then you enter 20.00 in the Aux. Price field as the trigger price for the attached Stop Sell order. You transmit the order.

    Assumptions
    Market Price 30.00
    Limit Buy Order
    Action BUY
    Qty 100
    Order Type LMT
    Limit Price 25.00
    Limit Sell Order
    Action SELL
    Qty 100
    Order Type LMT
    Limit Price 30.00
    Stop Sell Order
    Action SELL
    Qty 100
    Order Type STP
    Trigger Price 20.00
     
     
     
     
     
     
     
     
     
  •  

    Step 3 – Bracket Order Transmitted

     

    You've transmitted your Bracket order. The diagram above illustrates the Market Price, the Limit Prices for your original Limit Buy order and the attached Limit Sell order and the Trigger Price for the attached Stop Sell order.

    Assumptions
    Market Price 30.00
    Limit Buy Order
    Action BUY
    Qty 100
    Order Type LMT
    Limit Price 25.00
    Limit Sell Order
    Action SELL
    Qty 100
    Order Type LMT
    Limit Price 30.00
    Stop Sell Order
    Action SELL
    Qty 100
    Order Type STP
    Trigger Price 20.00
     
     
     
     
     
     
     
     
  • Step 4 – Market Price Falls, Original Limit Buy Order Fills

     

    As you expected, the price of XYZ shares falls to 25.00, which is the Limit Price for your original Limit Buy order. The order for 100 shares fills at that price. Your two Sell orders now enter the market.

    Assumptions
    Market Price 25.00
    Limit Buy Order
    Limit Price 25.00
    Limit Sell Order
    Action SELL
    Qty 100
    Order Type LMT
    Limit Price 30.00
    Stop Sell Order
    Action SELL
    Qty 100
    Order Type STP
    Trigger Price 20.00
     
     
     
     
     
     
     
     
     
  • Step 5A – Market Price Rises, Limit Sell Order Fills

    In one possible scenario, the price of XYZ rises to 30.00, which is the Limit Price of your attached Limit Sell order. The order fills at that price and you make $500.00 profit. The other attached order, the Stop Sell order, is canceled.

    Assumptions
    Market Price 30.00
    Limit Buy Order
    Filled at 25.00
    Limit Sell Order
    Limit Price 30.00
    Stop Sell Order is canceled
     
     
     
     
     
     
     
     
     
  • Step 5B – Alternate Scenario: Market Price Falls, Stop Sell Order Fills

    In an alternate scenario, the price of XYZ falls to 20.00, which is the Trigger Price of your attached Stop Sell order. A Market order executes at that price and you lose $500.00. The other attached order, the Limit Sell order, is canceled.

    Assumptions
    Market Price 20.00
    Limit Buy Order
    Filled at 25.00
    Stop Sell Order
    Trigger Price 20.00
    Limit Sell Order is canceled
 
 
 
 
 
  

Note: Any stock or option symbols displayed are for illustrative purposes only and are not intended to portray a recommendation.

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