Bracket orders are designed to help limit your loss and lock in a profit by “bracketing” an order with two opposite-side orders.
In this lesson, we’ll walk you through how to set up a Bracket order using TWS Mosaic.
- We’ll define the objective of the Bracket order type
- Show you how to create a Bracket order in TWS Mosaic
- Show you where you can locate Bracket orders within the Activity panel
Bracket orders are designed to help limit your loss and lock in a profit by “bracketing” an order with two opposite-side orders. These two opposing child orders become active when the parent order executes, but only one of them can be triggered, and if it does, the other is immediately cancelled.
Creating a Bracket order in TWS Mosaic
When you create a bracket order to buy, for example, this chart displays these resulting three orders:
A parent BUY order is bracketed by a high-side limit order to sell – a profit-taker – and a low-side stop order aiming to sell in order to limit open losses.
Meanwhile, this other chart shows a parent SELL order, which is bracketed by a high-side stop order to buy hoping to limit open losses, and a low side limit order to buy – a profit-taker.
Using TWS Mosaic, let’s set up an example using a BUY order.
In this illustration, let’s assume you want to pay a specific price to buy shares in a company. Let’s say it’s the tech sector giant Amazon.
To limit any losses, this order should include a Stop Loss to sell the position at a specific price below the entry price, as well as a Profit Taking order should the share price rise to a predetermined level above the entry price.
To create this, first set up your order to buy your shares using the Order Entry panel. Simply select the ticker, in this case AMZN for Amazon, and click the Buy button.
Next, enter the number of shares you want to purchase in the Quantity field, let’s say 300, and then from the Order Type dropdown menu select LMT.
Next, set the limit price at which you are prepared to buy shares, and then change the Time-in-Force field as needed.
We’ll now want turn this into a Bracket order, and we can do this by first clicking on the Advanced button, which will display additional order entry options.
Selecting Attach will reveal the Bracket functionality, and by checking the Bracket box, the Profit Taker and Stop Loss fields will automatically become checked-off with the Order Entry panel now displaying the add-on +Bracket.
You’ll now want to input your desired price for the Profit Taker Limit order, as well as the price for your Stop Limit sell order and the time-in-force for each entry as necessary.
To complete your order, review your details and click Submit when ready.
*Remember untriggered GTC orders are automatically cancelled by the system at the end of the calendar quarter following the one in which they were originally entered.
You’ll now see the details of your order in the Order Confirmation window, which shows the order type and each of the three related orders. If all of these details reflect what you intended, click Transmit to send your order to the exchange.
Disclosure: Interactive Brokers
The analysis in this material is provided for information only and is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad-based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation by IBKR to buy, sell or hold such investments. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.
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Disclosure: Order Types / TWS
The order types available through Interactive Brokers LLC’s Trader Workstation are designed to help you limit your loss and/or lock in a profit. Market conditions and other factors may affect execution. In general, orders guarantee a fill or guarantee a price, but not both. In extreme market conditions, an order may either be executed at a different price than anticipated or may not be filled in the marketplace.