Bracketed Orders

Bracketed orders go one step further than trailing stop orders. Just like the latter, you set a trailing stop as either a percentage or fixed spread (recall that on the previous page, our trailing stop was $2 for Hershey). In addition, however, you can establish an upper limit that, when reached, will result in the stock being sold.
Going back to our Hershey Chocolate example, let’s now assume you placed a bracketed order with a trailing stop level of $2 per share and an upper limit of $65 per share. The bracketed order will behave exactly the same as the trailing stop order, with the $2 trailing stop automatically ratcheting up as the price increases. The difference? When and if Hershey hits $65, the bracketed order will automatically convert into a market order and should be immediately executed by your broker.