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Futures 101 · Lesson 3 of 6

Order Types and Bracket Orders

An order tells your broker what to do and at what price. Pick the wrong type and you can get a fill you did not expect. Here are the four you need.

Market order

A market order fills right away at the best price available. It is fast, but the price is not fixed. In a fast market you can get slippage: a fill worse than the price you saw on the screen.

Limit order

A limit order says "buy at this price or lower" or "sell at this price or higher." You control the price, but the order may never fill if price does not come back to you.

Stop order

A stop order waits at a price you choose. When price reaches it, it becomes a market order. Traders use it to get out of a losing trade. That is the stop loss. A stop limits a loss in most cases, but in a fast market or a gap it can fill worse than your stop price.

Bracket order

A bracket puts three orders in at once: your entry, a stop loss and a profit target. When one exit fills, the other cancels. Traders call that one-cancels-other.

A bracket order (buy example)Profit targeta limit order to sell higherEntryyou buy hereStop lossa stop order to sell lowerWhen one exit fills, the other cancels.
The bracket sets your exit plan before the trade starts, while you are still calm.

The one habit that matters most

Never enter a trade without a stop already working. Use a bracket so your plan is in the market before emotion shows up. For more detail, read our guide to the types of market orders. CME also covers the basics in Things to Know Before Trading CME Group Futures.

Previous: Lesson 2Margin, leverage and daily settlement

All Futures 101 lessons

  1. Lesson 1: Points, ticks and dollar value
  2. Lesson 2: Margin, leverage and daily settlement
  3. Lesson 3: Order types and bracket orders (you are here)
  4. Lesson 4: Sessions, holidays and the roll
  5. Lesson 5: Risk per trade with micros
  6. Lesson 6: Your first plan: chart, simulator, journal

Mahalo for reading and trade well!
Glenn & Reid | Hawaiʻi Trading Academy

Risk disclaimer: Trading futures involves substantial risk of loss and is not suitable for every investor. You can lose more than your initial deposit. Examples on this page use made-up numbers to teach the math. Past performance does not guarantee future results. Hawaiʻi Trading Academy provides education only. We are not financial advisors, and nothing on this page is a recommendation to buy or sell any financial product. CME Group is an independent exchange; HTA is not affiliated with it. Contract details can change; check CME before you trade.