Bracketed Sell Order


DEFINITION of 'Bracketed Sell Order'

A sell order on a short sale that is accompanied (or "bracketed") by a buy stop order above the entry price of the sell order and a buy limit order below the entry price of the sell order. As the three component orders are based on set prices, this type of order protects the investor from the downside but also potentially locks in a gain without the investor constantly monitoring price.

BREAKING DOWN 'Bracketed Sell Order'

For example, say an investor enters a short position in ABC stock. To enter a bracketed sell order, he or she enters the sell order at $30 - which is the entry price - and adds a buy stop order at $35 and a buy limit order at $25. Depending on the price movement the investor will either gain $5 or set his or her maximum loss at $5.

  1. Limit Order

    An order placed with a brokerage to buy or sell a set number ...
  2. Order

    An investor's instructions to a broker or brokerage firm to purchase ...
  3. Stop Order

    An order to buy or sell a security when its price surpasses a ...
  4. Sell

    The process of liquidating an asset in exchange for cash. The ...
  5. Market Order

    An order that an investor makes through a broker or brokerage ...
  6. Buy Stop Order

    An order to buy a security which is entered at a price above ...
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  1. I want to buy a stock at $30, sell when it reaches $35, don't want to hang on to ...

    Once you've identified a security that you want to purchase, you need to determine a price at which you want to sell if the ... Read Full Answer >>
  2. What's the difference between a stop and a limit order?

    Different types of orders allow you to be more specific about how you'd like your broker to fulfill your trades. When you ... Read Full Answer >>
  3. How do I place an order to buy or sell shares?

    It is easy to get started buying and selling stocks, especially with the advancements in online trading since the turn of ... Read Full Answer >>
  4. How do I set a strike price in foreign exchange trading?

    In trading with a foreign exchange, a trader can set a strike price for a currency pair by entering a limit order or a stop ... Read Full Answer >>
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    During an initial public offering, or IPO, a trader may place a buy limit order by choosing "Buy" and "Limit" in the order ... Read Full Answer >>
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