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How Multi-Bracket Orders Can Help Optimize Performance within Futures Trading

March 20, 2019 by Daniels Trading| Tips & Strategies

Making money in futures trading hinges upon how well you walk the fine line between risk and reward. On paper, it sounds easy ― simply cut off losers and let winners ride ― right? Well, as any veteran of the markets will tell you, trade management may be the single most challenging aspect of active trading.

Fortunately, there is a wide array of strategies that help take the guesswork out of open position management. Trailing stops and dollar-cost averaging are two of the most popular methods. One particularly useful way of optimizing performance is through the implementation of multi-bracket orders. Multi-brackets furnish the trader with the luxury of incorporating more than one profit target or stop loss into a single trade. In a way, multi-bracket orders let you have your cake and eat it too.

The Value Of Multi-Bracket Orders

When it comes to successfully implementing a futures trading strategy, identifying opportunity, risk, and potential reward are only part of the job. Capitalizing upon strong setups via efficient trade execution drives profitability. Multi-brackets help complete this task by automatically placing profit targets and stop losses upon the market in adherence to almost any desired parameter.

In practice, a multi-bracket order is an order-cancels-order (OCO) that combines a series of profit targets and stop losses for positions of more than 1 contract. Upon a new position being opened at market, the multi-bracket’s OCO functionality ensures the position is closed out when either the profit target(s) or stop loss is hit.

Our webinar series covers all you need to know about dt Pro, from the basics up to advanced techniques. Sign up to watch them on demand!

The beauty of multi-brackets is their flexibility. They may be applied in a vast number of ways, limited only by the imagination of the trader. Below are a few applications that prove especially useful in futures trading:

  • Capturing Breakouts: The futures markets are renowned for their volatility. Bullish or bearish breakouts can occur in the blink of an eye, providing an opportunity for quick profits. Multi-brackets give traders the ability to place more than one profit target each at a unique price point. This ensures that profit is locked in from beneficial price action.
  • Trend Trading: Multi-brackets are useful for traders who want to realize profits while attempting to capitalize on a larger trend. For example, Erin the E-mini S&P 500 trader is interested in executing a bullish breakout scalp on the 9:30 AM EST cash open. In addition, Erin believes that price is likely to trend higher throughout the session. A multi-bracket takes the guesswork out of trade management, as the breakout scalp may be executed for a small profit while the trend trade remains live in the hopes of capturing a runner.
  • Stop Loss Modification: Multi-brackets can also be used in a similar fashion as trailing stops. As an example, assume that Erin’s breakout trade in the E-mini S&P 500 is quickly a success and hits its initial 8 tick profit target. While larger targets are still in play at +16 and +24 ticks, Erin wishes to eliminate risk exposure for the remainder of the trade. A multi-bracket may be programmed to automatically move the stop loss to breakeven upon the 8 tick target being hit. This feature is especially useful for those traders who wish to optimize the profitability of winning trades while limiting downside risk.

A big advantage of implementing multi-brackets is that they are fully automated. Upon the entry order being placed at market, the software trading platform does the rest. In addition to locating profit targets/stop losses, each is moved seamlessly without trader intervention. This greatly reduces latencies and promotes efficient, disciplined futures trading.

Integrating Multi-Brackets Into Your Futures Trading Plan

Perhaps the most attractive aspect of multi-bracket orders is usability. Given a robust software trading platform, the advanced applications of multi-brackets are easily adapted to almost any futures trading strategy.

A great place to begin investigating whether multi-brackets may be right for your approach to the markets is Daniels Trading’s online dt Pro webinar series. Watch as seasoned professionals demonstrate the advanced utility of dT Pro and features such as multi-bracket orders.

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Filed Under: Tips & Strategies

About Daniels Trading

Daniels Trading is division of StoneX Financial Inc. located in the heart of Chicago’s financial district. Established by renowned commodity trader Andy Daniels in 1995, Daniels Trading was built on a culture of trust committed to a mission of Independence, Objectivity and Reliability.

Risk Disclosure

The StoneX Group Inc. group of companies provides financial services worldwide through its subsidiaries, including physical commodities, securities, exchange-traded and over-the-counter derivatives, risk management, global payments and foreign exchange products in accordance with applicable law in the jurisdictions where services are provided. References to over-the-counter (“OTC”) products or swaps are made on behalf of StoneX Markets LLC (“SXM”), a member of the National Futures Association (“NFA”) and provisionally registered with the U.S. Commodity Futures Trading Commission (“CFTC”) as a swap dealer. SXM’s products are designed only for individuals or firms who qualify under CFTC rules as an ‘Eligible Contract Participant’ (“ECP”) and who have been accepted as customers of SXM. StoneX Financial Inc. (“SFI”) is a member of FINRA/NFA/SIPC and registered with the MSRB. SFI does business as Daniels Trading/Top Third/Futures Online. SFI is registered with the U.S. Securities and Exchange Commission (“SEC”) as a Broker-Dealer and with the CFTC as a Futures Commission Merchant and Commodity Trading Adviser. References to securities trading are made on behalf of the BD Division of SFI and are intended only for an audience of institutional clients as defined by FINRA Rule 4512(c). References to exchange-traded futures and options are made on behalf of the FCM Division of SFI.

Trading swaps and over-the-counter derivatives, exchange-traded derivatives and options and securities involves substantial risk and is not suitable for all investors. The information herein is not a recommendation to trade nor investment research or an offer to buy or sell any derivative or security. It does not take into account your particular investment objectives, financial situation or needs and does not create a binding obligation on any of the StoneX group of companies to enter into any transaction with you. You are advised to perform an independent investigation of any transaction to determine whether any transaction is suitable for you. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior written consent of StoneX Group Inc.

© 2023 StoneX Group Inc. All Rights Reserved

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Risk Disclosure

The StoneX Group Inc. group of companies provides financial services worldwide through its subsidiaries, including physical commodities, securities, exchange-traded and over-the-counter derivatives, risk management, global payments and foreign exchange products in accordance with applicable law in the jurisdictions where services are provided. References to over-the-counter (“OTC”) products or swaps are made on behalf of StoneX Markets LLC (“SXM”), a member of the National Futures Association (“NFA”) and provisionally registered with the U.S. Commodity Futures Trading Commission (“CFTC”) as a swap dealer. SXM’s products are designed only for individuals or firms who qualify under CFTC rules as an ‘Eligible Contract Participant’ (“ECP”) and who have been accepted as customers of SXM. StoneX Financial Inc. (“SFI”) is a member of FINRA/NFA/SIPC and registered with the MSRB. SFI does business as Daniels Trading/Top Third/Futures Online. SFI is registered with the U.S. Securities and Exchange Commission (“SEC”) as a Broker-Dealer and with the CFTC as a Futures Commission Merchant and Commodity Trading Adviser. References to securities trading are made on behalf of the BD Division of SFI and are intended only for an audience of institutional clients as defined by FINRA Rule 4512(c). References to exchange-traded futures and options are made on behalf of the FCM Division of SFI.

Trading swaps and over-the-counter derivatives, exchange-traded derivatives and options and securities involves substantial risk and is not suitable for all investors. The information herein is not a recommendation to trade nor investment research or an offer to buy or sell any derivative or security. It does not take into account your particular investment objectives, financial situation or needs and does not create a binding obligation on any of the StoneX group of companies to enter into any transaction with you. You are advised to perform an independent investigation of any transaction to determine whether any transaction is suitable for you. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior written consent of StoneX Group Inc.

© 2023 StoneX Group Inc. All Rights Reserved

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