If you are an expert trader whose trading strategies have gone towards the more sophisticated side of things, then it's time that your trade entries and exits require an extra nuance. Isn't it?

In most of the cases, the basic order types may cover all your trade execution needs. But if you really want to fine-tune your trades, a host of advanced order types are available. The advanced order types fall into two categories i.e. conditional orders and durational orders. Conditional orders mean your order will be fulfilled under specific conditions. On the other side, durational means that the order will take place within a specific timeframe.

Anyone can place trades if he has some knowledge about trading, but managing these trades is a difficult task. This is where bracket orders can help you out.

Bracket order

Bracket orders are conditional orders which are useful in intraday trading. It involves three combined orders in one order. As the name suggests, bracket, these orders are used to bracket the trade. This suggests that in addition to the initial order, two different direction orders are also included in this order. This approach is actually suggested for both buy and sell orders.

Bracket order categories

Initial Order

This is a kind of limit order which is used to establish the initial position

Take Profit or target order

This is the order that a trader wants to take advantage of, and take his position and profits.

Stop-Loss Order

This is used when the market is undesirable and you want to protect the losses.

Let's understand this with an example:

If the original is a buy order, then both target and stop-loss orders would be the sell orders. And, if the initial order is a sell order, then the second and third orders will be the buy order. https://www.adsensecustomsearchads.com/afs/ads/i/iframe.html

How bracket order works?

As discussed above, bracket order involves three different kinds of conditional orders including target exit, stop-loss exit, and trailing stop exit. A buy or sell order is immediately submitted to exit the trade if the criteria is fulfilled according to predefined instructions.

So, if you have placed to buy an asset at $100. Along with that, you will have to place two more orders. One of them will be a profit, which say, that if the asset price goes up to certain level, i.e. $130, your profit will be booked and the order will be triggered automatically.

On the other side, the third which you will place is the stop-loss order. In case, the trade is not working out and you want to limit your losses, placing a stop-loss order at $95 will be beneficial.

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