RiskPicksWhat is a Bracket Order?
A bracket order (also called an OCO, One-Cancels-Other) is a set of linked orders: your entry order, a stop loss, and a profit target. When your entry fills, the stop and target are placed automatically. When one of them fills, the other is canceled. This lets you define your entire trade plan in advance.
How it works
- Entry: you buy 100 shares of AAPL at $150
- Stop loss: automatically placed at $148 (your maximum loss)
- Profit target: automatically placed at $155 (where you take profits)
- Stock hits $155: profit target fills, stop loss is automatically canceled
- OR stock hits $148: stop loss fills, profit target is automatically canceled
Why use bracket orders
- Discipline: your stop and target are set before emotion enters the picture
- Set and forget: useful for swing trades where you do not want to stare at the screen
- No manual errors: you cannot accidentally forget to place your stop or move your target out of greed
Where to find them
Most active trading platforms support bracket orders. In ThinkorSwim, they are called "1st triggers OCO." In Interactive Brokers, look for "bracket" in the order type. Some mobile apps do not support them, which is one reason serious traders use desktop platforms.
Bracket orders turn your trading plan into a mechanical process. You decide the risk and reward before you enter, and the platform enforces it. This is how you prevent yourself from moving stops or chasing targets.