Bracket order variations

Conditional orders allow you to place orders that will be sent to the exchange or cancelled only if specific criteria are met.

One trigger OCO 

A one-trigger OCO (one-cancels-other) bracket order is an opening primary order (long or short) accompanied by two closing orders, in which one closing order pre-determines a profit exit price, and the other closing order pre-determines a loss exit price. The three components of the bracket order will be each set at a price determined by the trader at the time the order was entered. This type of order allows the trader to define a profit and loss on their trade without having to constantly follow their positions.

Long example

Let's say you're anticipating XYZ stock to rise in the near future. You can use a one-trigger OCO order to place an opening order for 100 shares of XYZ stock at $30 per share. Simultaneously, you place a bracket order with a profit exit price of $32 and a stop-loss exit price of $28. The trade calculation would look as follows:

Order Value
Profit exit Sell $32 x 100 = $3,200 
Primary order Buy $30 x 100 = $3,000
Loss exit Sell $28 x 100 = $2,800  

This means that the platform will either trigger the limit order if the stock price hits $32 resulting in a $200 profit, or will trigger the stop loss order if the price hits $28 resulting in a $200 loss. As soon as one of the orders is triggered, the other will be cancelled automatically. 


Short example

Let's say you're anticipating XYZ stock to drop in price, so you place a one-trigger OCO order to short 100 shares at $30. Simultaneously, you place a bracket order with a profit exit price of $25 and a stop-loss exit price of $35. The trade calculation would look as follows:

Order Value
Profit exit Buy $25 x 100 = $2,500
Primary order Sell $30 x 100 = $3,000
Loss exit Buy $35 x 100 = $3,500 

If the market moves in your favour, and the stock price drops to $25, the limit order is executed and filled for $25 per share resulting in a $500 profit. However, if the stock price moved up, you would be protected with a stop price of $35 resulting in a $500 loss.


OCO

An OCO (one-cancels-other) bracket order is a conditional order type in which two orders in a bracket are defined by the trader, each with its own associated trigger criteria. As soon as one of the orders is filled, the other order is cancelled automatically. Typically, you would attach an OCO bracket order to an existing position to set up your profit and loss exit plans.

For example, let's say you own 100 shares of ABC stock valued at $25 per share. You want to minimize your losses but lock in your profit by attaching a bracket order to your position. To set this up, you place a bracket order (i.e. two orders) with a profit exit price of $30 and a stop-loss exit price of $20, resulting in either a $500 profit or $500 loss, depending which way the stock price moves.

The trade calculation would like this:

Order Value
Profit exit Sell $30 x 100 = $3,000 
Existing position
Buy $25 x 100 = $2,500
Loss exit Sell $20 x 100 = $2,000

This means that the platform will either trigger the limit order if the stock price hits $30 resulting in a $500 profit, or will trigger the stop loss order if the price hits $20 resulting in a $500 loss. As soon as one of the orders is triggered, the other is cancelled automatically.

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