What is target sale on the stock exchange

Basic knowledge options: The bracket order

A bracket order is accompanied by two further orders.

So there are three interrelated orders.

The first order is, for example, a buy order with a limit (trading order: limit) or without a limit (trading order: market). If this is executed, the two accompanying orders are placed on the exchange immediately afterwards.

One of them is a sell order with a limit above the buy price. This sell order ensures that a profit previously determined by the trader is realized immediately.

The second order is a stop loss order (stop sell with limit). This order sells the position instantly if a predetermined rate

is fallen below. This serves to limit the loss. If one of the two accompanying orders is executed, the other is canceled immediately.

Example, purchase

A share has the last traded price of 35.30 euros. You want to buy with a "limit order" at a maximum price of EUR 35.00.

Then you want to sell at a profit of 38.00 euros, but at the same time limit the possible loss if the price falls below 34.00 euros.

You place an order on the stock exchange with a buy limit of 35.00 euros and a bracket order that sells either at 38.00 euros with a profit or at 34.00 euros to limit losses

ding order: bracket and its suitability for options

The high leverage of options often results in an enormous range of fluctuations in prices. It's not uncommon for an option to jump 10% or more in a matter of seconds.

A “bracket” trading order is therefore only partially suitable for options. It makes sense to put the target sale on the stock exchange immediately.

An example

One option costs 5.70 euros. You want to buy this for 5.50 euros. Then you want to sell them for 11.00 euros, i.e. according to the Option Advisor's 100% target sale strategy.

You can enter this order as a bracket order.

You place a buy order with the limit of 5.50 euros on the exchange and, as a bracket order, the sale with + 100% profit, i.e. 11.00 euros. However, you delete the sell order to limit losses and only leave the 100% target sell order on the exchange.

The combination of three becomes a combination of two. As soon as your buy order has been executed, your target sell order is on the market with + 100% profit.

Conclusion on the bracket order

The “Bracket” trading order is ideally suited for options, as shown above (as a combination of two). You can buy with a limit and then you will immediately have your order to realize profits on the market.

I advise using the bracket order as a combination of two for options if you want to exit with a fixed limit as a profit.

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