SVE · Execution
Bracket orders (take-profit / stop-loss)
Also called: bracket order, OCO exits, take-profit and stop-loss
A bracket order pairs a position with a take-profit and a stop-loss exit; when one exit fills, the other is canceled automatically.
Definition
A bracket order surrounds a position with two exit orders: a take-profit on the favorable side of the entry and a stop-loss on the unfavorable side. The two exits are linked as one-cancels-other (OCO), so when one fills the other is withdrawn.
Brackets can be attached at entry or added to an open position, and are a standard tool for defining risk before a trade moves.
Intuition
Deciding exits in advance removes some of the hardest decisions from the moment of stress. The bracket fixes the maximum planned loss and the planned target, and the OCO link prevents the classic error of one exit filling while the other stays open and later opens an unwanted new position.
The ratio between target distance and stop distance also makes the trade's planned reward-to-risk explicit.
How it's calculated
For a long position entered at price E with stop S below and target T above:
Planned risk per unit = E − S Planned reward per unit = T − E Reward-to-risk = (T − E) / (E − S)
For a short position the signs reverse. Position size often follows from a fixed risk budget R: quantity = R / (E − S).
Break-even win rate for a given reward-to-risk ratio b (ignoring costs) is 1 / (1 + b): with b = 2, the trade needs to hit its target more than one time in three to break even.
Example: a long entry at 50 with a stop at 48 and a target at 54 risks 2 to make 4, a reward-to-risk ratio of 2. With a risk budget of 500 currency units, the position size is 500 / 2 = 250 units, and the trade needs to reach its target more than a third of the time to break even before costs.
How to read it
The stop is usually a stop order that becomes a market order when triggered, so the actual exit can be worse than the stop price in fast markets or across gaps. The take-profit is usually a resting order at a set price, which fills at that price or better but may not fill at all if price only touches it.
Place stops where the trade idea is invalidated, not at arbitrary round numbers where many other stops cluster.
Common mistakes
- Assuming the stop price is the guaranteed exit price.
- Setting stops so tight that normal volatility triggers them.
- Moving the stop further away once the trade goes against you.
- Forgetting that a bracket attached to an order that never fills should be canceled with it.
In Saqrid
In SVE you can set take-profit and stop-loss on an open position directly from the chart, and the brackets are managed automatically.
All of this runs as paper trading on a built-in matching engine.
Open SVE.