If you are a regular crypto trader, chances are that you are aware of the term bracket order. This order is designed to ease trading for the traders during volatile market trends. Intraday trading is a good idea for the experienced crypto traders, and to become an expert trader, you must learn about all the advanced order. And, one such order type is bracket order.
Here at Growlonix, we help our traders place all kinds of advanced orders. If you are new to the trading world, we can help you understand about such orders before applying.
Table of Contents
What is bracket order, and how it works?
A bracket order is a unique order, allowing its traders to place entry, stop, and target order, all three at once. Sounds complicated? But it’s not that complicated as it seems!
Once your entry order is filled, the target profit and stop orders will also be executed immediately. The term Bracket Orders suggests that this order is used to bracket the transaction. This approach can be used for both buy and sell orders. Here, both target and stop-loss orders would be the sell orders if the original order is a buy order. Let’s understand how system works:
- A limit order
- Stop-loss market order
- A target profit limit order
If stop-loss trigger price is a hit, it will be executed as the market order, and the limit order will be canceled automatically. Similarly, if the target profit trigger price is met, the stop loss will be cancelled. A bracket order is a combination of three orders placed at the same time. This order will restrict any possible losses on a position while allowing you to earn profits at the price you specify.
Let’s comprehend this concept with example:
Assuming that a trader issues a limit order to buy any asset for $100 per coin, and this is accomplished by a stop-loss order of $92, along with a target order of $105 per coin.
Here, the primary position of the trader is bracketed by a higher-priced and lower-priced order. Now, one of the two limit orders will be executed here. Let’s understand the situation:
Scenario 1
If the price of the asset increases to $105, the target order will be placed automatically and the stop-loss order will be cancelled.
Scenario 2
If the price of asset falls below the stop-loss value, it will be followed by the target order cancellation.
Scenario 3
Bracket order is typically a limit order. In case it was a buy order and you buy an asset for $100. The trader would not be allowed to buy asset in first place, if the price doesn’t exceed $100.
If an order is not made in any of these scenarios, the trader will cancel the order at the end of day.
When can one use bracket orders?
Placing a bracket order on Growlonix will gives you an advantage to set and forget about it. Whenever your preset conditions/price reaches to the target price, the stop loss will be cancelled automatically. The traders can set this order before the trade gets executed. Well, placing bracket orders with us will give flexibility to traders and control over their profit and loss.
You can make use of bracket orders smartly by considering crypto trading signals from us. After setting a bracket order, modifications are not possible. So, make sure to execute this order wisely. The most popular bracket orders which traders can place via the best crypto trading terminals are OCO orders, OSO orders, etc.
This advance order contains conditions that trigger buying or selling of the crypto asset automatically whenever the predefined conditions are met. Bracket orders help a trader to lock in profits while limit losses even if the asset prices move whenever the trader is not available on the system.
Placing bracket order on Growlonix
When it comes to setting up bracket order with us, you may select the custom OSO and then place the STOP BUY as primary order while the OCO order is used as the secondary order. What this basically means is that, here you aim to limit your profits or losses within a specific price range.
The traders can set up bracket order to an already open position while placing a limit or market order. The trader is required to check/tick the bracket order option on the exchange from where they are placing order. Now fill in the boxes like limit order, stop loss order, target order, etc.
Modifications are not possible after setting up a bracket order. One can’t use bracket orders for regular trading. Why? Here in this order; the outcome of the order depends on the crypto asset and the price levels selected. One can use these orders smartly for futures trading on multiple major crypto exchanges.
All in all, considering bracket orders for placing a trade could be the great option whenever you are trying to stay within a defined or your target price range.
Bracket orders can be used in two ways
Traders can go in two directions, i.e. short trades and long trades. To cater for this, you can use bracket orders in two ways:
- Buy bracket order
- Sell bracket order
Let’s understand about these two:
Buy bracket order
This order type is used for long trades and the primary order here will be a buy order. This order will be bracketed by a sell limit order and sell stop order (stop-loss order). Here the sell limit order will act as the point of earning maximum gains and the sell stop order will minimize the potential losses by selling before the price drops too low.
Sell bracket order
Here the sell order will be the primary order which is used for the short trades. The primary order will be bracketed by a conditional buy order and buy limit order. The conditional buy order will buy the asset automatically before the value of asset value increases too much, resulting in minimal losses. The buy limit order will lock in profits meanwhile at the predefined values set by trader.
Advantages/disadvantages of Bracket orders
Advantages
By placing a bracket order, the traders can protect themselves from incurring any losses while securing the ways of earning profits. Let’s understand about a few advantages of placing bracket orders:
- This order type allows you to place three orders at once. Here, you can limit your risk exposure and loss by placing a stop-loss order.
- This order gives traders an opportunity to book profits with a predetermined profit objective.
- Bracket orders may seem complicated, but actually they are very easy to use.
- Ensures automatic risk management
- The order gives a sense of security to the orders and therefore, minimizing the chances of loss.
Disadvantages
- The major disadvantage of placing bracket orders is that they cannot be cancelled
- Modifications are not possible after opening positions
- Entry via stop-loss order is not permitted
- You cannot put a limit order during exit
If you are facing troubles to sound money management and the trade execution techniques, considering bracket order seems to be the right option. Here at Growlonix, you can use this strategy to protect in your gains while limiting losses. Trade signals are also provided so as to ensure that you enter/exit the trade at the right time. Considering volatility of crypto trading market, using bracket orders is the better option. Place your orders via Growlonix and multiply your crypto gains easily.
Conclusion
Bracket orders are the most popular advanced orders useful for the day traders. They help traders to stick to their trading strategies to reach predetermined profit levels while prices of assets are moving up, and managing risks during downward trend. These orders will make all your trades automated, reduce risks, and lets traders earn profits. Once you will understand this order and how to use it, it will be helpful in your trading strategy.
