OCO Orders

A one cancels other (OCO) order links two orders together so that if one fills, the other is automatically cancelled. It solves a simple but dangerous problem: if you place a stop loss and a profit target as separate orders, and the target fills, the stop is still sitting there. If the price later falls, that stop could fill and open an unwanted short position. OCO prevents that.

The classic use: exits on an open position#

You own a position and want two possible exits: a profit target and a stop loss.

A second use: breakout entries in either direction#

OCO can also enter a trade on a break in either direction. A stock has been trading between $48 and $52. You place:

• a buy stop at $52.20 to enter long on an upside breakout, and
• a sell stop at $47.80 to enter short on a downside breakdown,

linked as OCO. Whichever triggers first opens your trade, and the other is cancelled, so you do not end up long and short at once. See Breakout Trading.

OCO inside bracket orders#

A bracket order is an entry plus an OCO pair of exits that only activates after the entry fills. Platforms often call this OTOCO: one triggers one cancels other. See Bracket Orders and OTO and OTOCO Orders.

How cancellation works in practice#

Cancellation is fast but not instant. In an extremely fast market, both orders could theoretically fill before the cancel reaches the market, though platforms design OCO logic to minimise this. Most brokers handle the link on their servers, reducing the risk. Partial fills add a wrinkle: if the target fills partially, many platforms reduce the size of the linked stop to match the remaining position. Check how your platform handles it.

OCO and time in force#

Both orders in an OCO pair usually share the same time in force. For a swing trade, make both GTC so the protection does not disappear at the end of the day. See Time in Force: Day, GTC and GTD Orders.

When not to use OCO#

• When you want to scale out with several targets and a stop. You need a structure that reduces the stop as each target fills, which some platforms support and others do not. See Scaling Out and Partial Profits.
• For hedged positions where you intentionally want both orders able to fill.

Common mistakes#

• Placing the stop and target separately instead of as OCO, leading to an accidental reverse position.
• Using day orders for an overnight position, leaving the OCO pair to expire at the close.
• Forgetting to cancel an OCO pair after closing the position manually. Most platforms cancel linked orders automatically, but not all.

Frequently asked questions#

What does OCO mean in trading?#

One cancels other: two linked orders where the fill of one cancels the other automatically.

What is the difference between OCO and a bracket order?#

OCO is the pair of linked orders. A bracket is an entry that, once filled, activates an OCO pair of exits.

Are OCO orders available for crypto?#

Yes. Many major crypto exchanges offer OCO orders, usually combining a limit order with a stop-limit order.

Sources#

• Wikipedia, Order (exchange)