Bracket Overview

Brackets help you integrate a risk management strategy directly into the creation of an equity or option order. Bracket orders are conditional orders you can attach to your stock or option orders that enable you to pre-define profit and loss targets where, if those targets are reached, the software will automatically send a market order to exit the position.

Bracketed orders consist of a primary order and up to three contingent orders, which if triggered, will close out the position opened by the primary order. Brackets can provide automated risk management for your open positions regardless of whether you are logged on to the software.

To set up brackets:

During order entry: In the Trading tab, click Add Bracket, or if the Bracket panel is already open, check the exit type you wish to add to the order you are creating.

On an open order: In the Order Status tab, click on the order and click Apply Bracket, or in a Chart, right-click on the order indicator and select Add/Edit Bracket.
On a position: In the Positions tab, click the position and click Apply Bracket.

TIP: See Managing Bracket Orders for more information on adding brackets to open orders and positions.

Certain aspects of the bracket orders are predefined:

The quantity of the bracket order(s) will always be equal to the quantity filled in the primary order.
Brackets remain active with their primary order or primary position (when the primary order fills) indefinitely, unless they are manually removed or are triggered and filled.
Bracket orders can be set up for any equity or option order that opens or adds to an existing position, regardless of the venue of the primary order.
Brackets on symbols with wide spreads may not fire if the spread is too wide.
Bracket orders are only active during the standard session (9:30 a.m. ET to 4:00 p.m. ET)
Bracket orders are always sent as a SmartEx Market order regardless of the primary order's routing venue.
Bracket orders trigger off the bid/ask price for both stocks and options.
While the Est. Price is calculated off the Limit or Inside bid/ask price (for market orders), the actual exit trigger price will be based on the average fill price from the primary order. See the Bracket Order Examples topic to get a better understanding of brackets in action.
Note: Order quantities on brackets will not adjust due to corporate actions, including but limited to stock splits, stock dividends, spin-offs, mergers, and name changes.
Bracket exits will not function on boxed positions.
Brackets placed on stocks that do not have bid/ask quotes, including Pink Sheet securities, will not activate.
When placing a bracket order to sell and close out a long position, if the tradable quantity of your position is less than the quantity you specify in the order, the software will send the order for the lesser amount rather than rejecting the order due to insufficient shares available to trade.
StreetSmart Only: Brackets, Conditional Orders, and Alerts created in the StreetSmart platforms can only be viewed and managed from the StreetSmart family of applications and are not currently available from Schwab.com or other Schwab applications.

You may establish up to three types of exits:

Profit Exit: Specifies the increase (or decrease for short sale orders) in value from the average fill price required to trigger the profit exit. The value can be a certain number of points (pts) or a percentage change from the execution price, or the exit price itself.

For example, if you bought a stock at $10 and wanted to exit the position at $12, you could enter 2 pts, 20%, or $12. The Est. Price label will show you what the likely result might be if the Profit Exit is triggered, but that price will be adjusted if the average fill price on your order is different.
Trailing Stop Exit: Specifies the amount you are willing to let a stock or option price go against whatever gains it may attain before closing it at the market price. The value can be a certain number of points or a percentage of the execution price.

If you use a trailing stop exit in conjunction with a profit and/or loss exit, the trailing stop will operate between these two exits. If either of the profit or stop loss exit prices are met, the bracket will trigger regardless of any trailing stop you may have set.

For example, if you bought a stock at $10 and wanted to sell should the market move against you 5% (or .5 points per share) from the execution price, the trailing stop would place an order to close your position only if the stock price loses 5% from its highest gain. The lowest price that would trigger a market order to sell would be $9.50 because it never gained on the execution price. It is important to remember that a percentage on this exit is based on the original fill price, rather than on the current market price.

As another example, the price might move up without ever dropping .5 points. It then hits $14, retreats to $13.5 and the order is triggered. If you had also set up a profit exit of 10% and a loss exit of 3% in conjunction with your trailing stop exit, the bracket would trigger at either 3% below the execution price or 10% above that price if met. This would occur regardless of your trailing stop calculation.
Stop Loss Exit: Specifies the decrease in value (or increase for short orders) from the average fill price required to trigger the stop loss exit. The value can be a certain number of points (pts) or a percentage change from the execution price, or the stop loss price itself.

For example, if you bought a stock at $10 and wanted to close the position after it had lost 10%, you could enter 1 pt, 10%, or $9. The Est. Price label will show you what the likely result might be if the Stop Loss Exit is triggered.