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Bracket

Sell: A single order in this case is used to secure a previously purchased position so that at closing a pre-defined level of profit is realized or a pre-defined maximum acceptable loss occurs.
Buy: Due to the nature of the order, a buy order is mainly applied in order to open a short position. In this case, closing also leads to a pre-defined level of profit or a pre-defined maximum acceptable loss.

Reasons for using the order

Trading with standard orders including Limit Price and Stoploss orders allows the investor to secure at least one side of the potential development of the price, i.e. a Limit Price order can be used to realize a profit or a Stoploss order can be used to abandon a position with a sale at an acceptable loss level.

The investor must continuously monitor developments on the market and use this monitoring to determine if the stock is rising or falling and change the Stoploss or Limit Price order, which places huge demands on time. A Bracket order combines both types of "elementary" orders, thereby covering both sides of potential developments in a single order, sparing the investor the need to continuously edit existing and enter new orders.

NOTE

The minimum allowed range between the profit Limit Price and the Stop Price must be at least 6% from the lower of the two prices.
Funds are always blocked for a Bracket order up to the maximum possible amount for the validity of the order, i.e. regardless of the "cheaper" or "more expensive" price in the active area.

Warning

In the event of sudden changes in prices (e.g. the announcement of price-influencing information) a situation may occur where the market price moves outside the range entered by the investor and the Stoploss order will be created with a delay. When using a Bracket order, the investor is aware of the fact that the broker has no responsibility for damages caused by this technical delay in the reaction of the order to market conditions.


Placing an order

I bought shares of ČEZ at CZK 850 and my investment strategy is to realize a profit of 15% or lose 5% if the position develops negatively. Here a Bracket order is used.

Parameters

  • Order type = Bracket sell order. The expanded form for selecting the parameters of this intelligent order is opened by pressing "Bracket" in the e-Broker order form.
  • Limit Price for realizing a profit [Upper price] = CZK 977.50
  • Stop Price for closing a loss position [Lower Stop Price] = CZK 808.50
  • Limit Price price for closing a loss position [Lower price] = CZK 800.00 (for example)
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Exchange list

BuySell
CZK26,2388324,85917
USD1,199791,12989
GBP0,869400,81874
CHF1,103701,03940
PLN4,729014,45352

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