One-Cancels-Other (OCO) orders

One-cancels-other (OCO) is the term used to describe placing two orders simultaneously. When market movements cause either order to be filled, the unfilled order is automatically cancelled.

The benefit of using OCO Orders is that if one part of the instruction is triggered, the other order will automatically be cancelled.

OCO orders can be used in several different ways.

Using OCOs to close an order

The most common is when a trader is about to enter the market but would like to attach a Stop & Limit to the position. Let's use an example of a buy trade of 100 share CFDs on Amazon, at a current market price of 180.50. A stop loss is added at 170.50 and a take-profit at 195.50. This means that as soon as the trade is placed, the trader will hold 100 Amazon share CFDs with a stop at 170.50 and a take-profit at 195.50. If either of these attached orders are triggered, the position will be closed and the opposing order will be cancelled.

Using OCOs as entry orders

Another situation when a trader may utilise OCO orders in a slightly different capacity would be around a big news announcement. A trader would use an OCO to open a position if they were of the opinion that the announcement would cause a big market move in either direction, but they were not confident on which direction the market would move. The trader might then place an OCO order, allowing him or her to sell if it drops, and buy if it rises.