What Is One Cancels the Other Order (OCO)?
An One Cancels the Other Order (OCO) is a type of order that combines two separate orders into one. It allows traders to set up both a buy and sell order at the same time, with each order cancelling out the other if either one is executed. This type of order can be used in any market, including stocks, futures, options and currencies.
The main advantage of an OCO order is that it helps limit risk by allowing traders to enter both long and short positions simultaneously without having to manually cancel or adjust their orders. For example, if a trader wants to take profits on a stock they own but also protect against losses should the price fall too far, they could use an OCO order to place both stop-loss and take-profit orders at once. If either one gets triggered then the other will automatically be cancelled so there’s no need for manual intervention from the trader.