One Cancels Other
a.k.a. OCO, One Cancels Other Order, OCO order
A pair of linked orders where, as soon as one fills, the other is automatically cancelled.
A one cancels other (OCO) order ties two orders together with a string. When one gets triggered, the other is cut loose and deleted. The classic use is protecting a trade with both a take-profit and a stop-loss: whichever is hit first closes the trade, and the other quietly disappears.
Breakout traders use it too: a buy stop above a range and a sell stop below it. Whichever side price breaks out of, you are in, and the other order is gone so you do not end up long and short at once.
Bracketing a range with OCO
- EUR/USD is stuck between 1.0800 and 1.0850.
- You place a buy stop at 1.0860 and a sell stop at 1.0790, linked as OCO.
- News hits and price spikes to 1.0865.
Bottom line: Your buy stop fills at 1.0860 and the sell stop is cancelled automatically.
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