Market Insights

Anyone can place trades, but managing them can be a lot more difficult. That’s one reason why bracket orders exist.

Bracket orders let investors buy an asset and simultaneously create two sell orders. Entries and risk management are combined into a single task, saving time and frustration.

While common in the world of equities and futures, bracket orders are rare in the world of cryptocurrencies. That is, until now — because TradeStation Crypto has added bracket orders on popular charting service TradingView.

This screen shot demonstrates a potential order on Ethereum (ETHUSD). The user has already linked his or her TradeStation Crypto account to TradingView via secure API. The order panel was opened by clicking the icon on the right side.

Bracket Orders on TradingView

Notice how TradingView offers the choices of Market order, Limit order and Stop order at the top. This section, which hasn’t changed, lets traders buy cryptocurrencies like Bitcoin, Ethereum, Bitcoin Cash and Litecoin.

The big enhancement is in the next section with the “Take Profit” and “Stop Loss” buttons. Say you purchase ETHUSD at $1,200. You can immediately set a potential profit target of $1,400 and a stop loss at $1,100.

You can also input a certain number of cents (or “pips”) to easily calculate risk and reward. For example, an investor could use 10,000 pips for “Take Profit” and 2,000 pips for “Stop Loss.” TradingView will then automatically create a limit sell order $100 above the entry price and $20 below. Also notice how the 5:1 ratio between profit target and stop loss is displayed.

Bracket Orders Cancel Each Other

Bracket orders are also known as “OCO” orders, or “one-cancels-the-other.” This is a major convenience for busy traders.

Following the second example above, the investor would go long ETHUSD for $1,200. If rallies to $1,300, the limit sell order would activate to render a $100 profit per coin. It would also cancel the stop loss $20 lower at $1,180. That way, you don’t have extra unfilled orders floating around.

It works the same to the downside. A drop to $1,180 would trigger the stop loss and cancel the $1,300 sell order.

In conclusion, bracket orders are a big help for clients because they do everything at once: entry, profit target and stop loss. Clients don’t have to watch positions or keep checking prices. They also function as a unified set of instructions that will trigger or cancel each other. A common tool from the traditional world of trading is now available with digital assets, thanks to TradeStation Crypto’s integration with TradingView.