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Stock Market Orders: The Bracketed Order

Jul 15, 2008
To get the best from bracketed orders, you need to have sufficient knowledge of how they work in the stock market.

Here is an example which might help you to understand how stock market bracketed orders work. If you place a bracketed order for 100 shares at $30 each, you can then set a sell stop order at $20 and a sell limit of $75. This means that the shares will be sold if they drop to $20 or rise to $75. The trick, of course, is knowing where to set these limits.

Bracketed orders provide the investor with better control over his investment, because they allow you to know what is going to happen to it, and to be in control of it. You set how much you are prepared to lose or gain.

There is a disadvantage to bracketed orders, however, which is that you limit your earnings, but still could lose a large amount of money in your attempt to increase your profits. There is no guarantee of course that these profits will forthcoming. Each person who invests in the stock market varies in the degree to which they are prepared to take risks, depending on their personality and financial situation. So you need to assess your own risk taking potential before you invest in bracketed orders.

It is however a good idea to learn about bracketed orders in the stock market, because you can use this knowledge, depending on how much risk you are prepared to take, to affect the outcome of your investments. You might also need some professional help to manage your account, because people whose business is to deal in this kind of investment are likely to be good judges of their management. They base this judgment on detailed knowledge of the stock market, experience.

Stockbrokers are able to assist you in the management of your investments, and to advise you on the placement of bracketed orders. If you invest in a company which then goes bankrupt, you lose all of your investment, not just the profits you could have made.

When looking for a stockbroker to help you with placing bracketed orders in the stock market, it is important to find one who is experienced in this type of investment. Try to find one who is more interested in helping you than in increasing his own profits, and really wants to assist you in achieving your personal investment goals.
About the Author
Alexander West holds the Financial Planning Certificate. One of his passions is learning and teaching people about finances. Join others creating more wealth in their lives by clicking here
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