investing
Bracket orders

A bracket order allows you to place stop and limit orders simultaneously to help you secure profits while limiting losses. When buying securities, a stop order offers some protection in case the price of a security drops in value, while the limit order lets you take profits by exiting the position once the security reaches your specified target price. Once you set up your bracket order, your stop and limit prices trigger automatically. But just like any stop & limit orders, bracket orders are not fail proof. Be sure to stay on top of your account to make sure your orders are executing as prescribed. Now, that we covered the basics, let’s make bracket orders easier to understand by using an example.

Choose the platform of your choice to learn more.

  • Questrade Trading & Mobile app

    Creating a bracket order for a new position:

    Suppose you want to buy stock XYZ for the first time at $20 per share, sell when it reaches $25, and let it go if it dips below $18. Bracket orders give you the tools to set all these parameters within a single order entry window. To do so:

    1. Log in to Questrade Trading or the mobile app
    2. Click Order entry
    3. Enter the opening primary order details for the new security you want to buy or short sell (this is the stock entry price – the price you’re willing to pay to enter the position or the price you’re willing to short-sell the security for)
    4. Click View more options
    5. To begin setting your bracket order, check off the Bracket order box, and enter your stop and limit prices

     
    Enter your stop price:
    • If you’re buying, this is the lowest price you allow the shares to drop in value before you sell your shares for a loss. (In our example, this is $18 per share)
    • If you’re short-selling, this is the highest price you allow the shares to go before you buy back the shares for a loss

    Once the stop order is triggered, it will be transmitted to the exchange as a market order, meaning the order will fill at the stop price or best available price. To secure your price, you could enter a stop-limit price where the order will fill at the limit price or better.

    Using a stop-limit price is optional for U.S. securities, but mandatory for Canadian securities.

    Enter your limit price:
    • If you're buying a security, this is the highest price you want the shares to go up in value in order to sell them to make a profit (in our example, this is $25 per share)
    • If you're short-selling, this is the lowest price you want the shares to go in order to buy the shares back to make a profit

    Finally, once you enter all the details for your bracket order, Click Buy or Sell to send your order to the Exchange. A message appears explaining the details of your bracket order. Click Yes to proceed. Lastly, depending on your order entry user preferences, an order confirmation window will appear. Review your order, and click Send order to send your order to the exchange.

    Note: Select a duration to specify how long the order should remain active. Only Day or GTC durations can be selected.

    Modifying a bracket order

    1. Log in to Questrade Trading or mobile app
    2. Click the Account button placed in the left-sided menu bar
    3. Select the Orders tab and tap Open orders
    4. Click the open bracket position and the order window will pop-up. Click Modify order
    5. Modify the parameters as desired, and click Buy (long) or Sell (short)
    6. A message appears explaining the details of your bracket order. Click Yes to proceed
    7. Depending on your order entry user preferences, an order confirmation window appears. Review your order, and click Send order to send your order to the exchange.

     
    Cancelling a bracket order

    1.    Log in to Questrade Trading or mobile app
    2.    Click the Account button placed in the left-sided menu bar
    3.    Select the Orders tab and tap Open orders
    4.    Click the open bracket position and the order window will pop-up. Click Cancel order
    5.    A message appears explaining the changes to your bracket order. Click Yes to proceed

    You can cancel the primary order, both exit orders, or just one of them. Cancelling the primary order will cancel the two exit orders. 

  • IQ Edge

    Creating a bracket order for a new position
    Suppose you want to buy stock XYZ for the first time at $20 per share, sell when it reaches $25, and let it go if it dips below $18. Bracket orders give you the tools to set all these parameters within a single order entry window. To do so:

    1. Log in IQ Edge
    2. Click Order entry
    3. Enter the opening primary order details for the new security you want to buy or sell
    4. To begin setting your bracket order, check off the Bracket order box, and enter your stop and limit prices:

    Enter your stop price:
    • If you’re buying, this is the lowest price you allow the shares to drop in value before you sell your shares for a loss. (In our example, this is $18 per share)
    • If you’re short-selling, this is the highest price you allow the shares to go before you buy back the shares for a loss

    Note: once the stop order is triggered, it will be transmitted to the exchange as a market order, meaning the order will fill at the stop price or best available price. To secure your price, you could enter a stop-limit price where the order will fill at the limit price or better.

    Using a stop-limit price is optional for U.S. securities, but mandatory for Canadian securities.

    Enter your limit price:
    • If you're buying a security, this is the highest price you want the shares to go up in value in order to sell them to make a profit (in our example, this is $25 per share)
    • If you're short-selling, this is the lowest price you want the shares to go in order to buy the shares back to make a profit

    Finally, once you enter all the details for your bracket order, Click Buy or Sell to send your order to the exchange. A message appears explaining the details of your bracket order. Click Yes to proceed. Lastly, depending on your order entry user preferences, an order confirmation window will appear. Review your order, and click Send order to send your order to the exchange.

    Note: Select a duration to specify how long the order should remain active. Only Day or GTC durations can be selected.

    Modifying a bracket order

    You can modify open (unexecuted) bracket orders to change their primary entry order, and the exit (limit & stop) orders without having to manually cancel or create a new ones. To do so, follow the steps below:

    1. In the main toolbar, click Account
    2. Click the Orders tab and select Open orders
    3. Click the pen icon located besides the order you want to modify. The modify order window opens. Previously defined order entry parameters will be enabled for modification
    4. Modify the parameters as desired, and click Buy (long) or Sell (short)
    5. A message appears explaining the details of your bracket order. Click Yes to proceed
    6. Depending on your order entry user preferences, an order confirmation window appears. Review your order, and click Send order to send your order to the exchange

     
    Cancelling a bracket order
    To cancel a bracket order, click the Orders tab and go to the order you wish to cancel. Once you find it, click the X button to cancel it. You can cancel the primary order, both exit orders, or just one of them. Cancelling the primary order will cancel the two exit orders.
     

    How do I attach a bracket to my existing position?
    You can also attach a bracket order to an existing position to cover both the profit and loss scenarios. The limit order pre-determines a profit exit price, and the stop order pre-determines the loss exit price. If either the stop or limit order is triggered, the remaining order is cancelled automatically, without you having to actively monitor the stock’s price movements. To add a bracket order on to an existing (long or short) position, you’ll have to attach:

    • Limit order
    • Stop loss order (or stop-loss limit)

    To do so, please follow the steps below:

    1. In the toolbar, click Order entry
    2. In the Summary tab, right-click the position you want to attach a bracket to and select Attach bracket
    3. In the Attach bracket window, enter the closing order details for your primary order (position entry prices) as we discussed above
    4. Click Buy or Sell to send your order to the exchange

    A message appears explaining the details of your bracket order. Click Yes to proceed. Depending on your order entry user preferences, an order confirmation window appears. Review your order, and click Send order to send your order to the exchange.

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