Bracket Order

A bracket order is a trading order which is made up of three linked orders: A buy order; a take profit order; and a stop-loss order. After the buy order has been filled and the desired securities have been bought, the take-profit order and the stop-loss order are placed.

If the price of the securities purchased with the buy order reaches the level selected for the take-profit order, the securities are sold and the take-profit order is filled, canceling out the stop-loss order. If the price of the securities falls to the stop-loss limit, the securities are sold and the stop-loss order is filled, canceling out the take-profit order.

Bracket orders can be used to protect an investment against loss and to ensure that securities are sold if the price rises to the desired level (or falls in the case of short positions) from the time that the investment is made.

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