An OCO (One Cancels the Other) order is a trading strategy that simultaneously places a take-profit order and a stop-loss order. When one order is executed, the other is automatically cancelled.
Notes:
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The take-profit order is always a limit order.
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The stop-loss order can be set as either a limit order or a market order.
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When placing an OCO order for CBOE futures, the stop-loss order must be a limit order.
Example
A client holds 100 shares of Company A and places an OCO order with two sell instructions. With the stock currently at $90, one order is a take-profit limit order to sell 100 shares at $100, while the other is a stop-loss market order set to sell 100 shares if the price drops to $80. Here's what can happen:
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If the price rises to $100, either all or part of the 100 shares will be sold, and the stop-loss market order at the trigger price of $80 will be automatically cancelled.
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If the price falls to $80, the stop-loss market order will be executed, and the take-profit limit order will be automatically cancelled.
Submission time
OCO orders can be submitted at any time. However, if you specify a specific trading session for an OCO order and submit it outside of that session, the order will be queued and will only be submitted once the specified trading session begins.
Time-in-force
The time-in-force decides how long an OCO order will remain active before it is executed or expires. It's important that both the take-profit and stop-loss orders share the same time-in-force. OCO orders offer the following options:
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Day: Active only for the trading day.
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GTD (Good-Til-Cancelled): Active until it is cancelled.
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GTC (Good-Til-Date): Active until a specified date.
Note:
Trading session
You have the option to set different trading sessions for take-profit and stop-loss orders. However, it is recommended to set the same trading session for both. This ensures that they become active together, helping to achieve the intended take-profit or stop-loss outcomes. Setting different sessions can lead to misalignment and prevent them from serving their intended purposes.
Limitations and requirements
1.Take-profit and stop-loss must be for the same asset, with positions available before placing them.
2.OCO orders can only close positions and will fail if they exceed available positions.
3.Triggered stop-loss orders are not guaranteed to execute and will be cancelled if unfilled when the time-in-force expires.
4.Positions involved in OCO orders will be frozen.
5.OCO orders aren't guaranteed to be routed to the upstream brokers or exchanges and may fail due to factors such as insufficient buying power and positions.
Disclaimer
Advanced orders are an online trading tool we developed for client convenience. We make every effort to ensure stable and reliable service. However, we are not liable for any losses or gains resulting from unexecuted or incorrectly executed trades due to network interruptions, server issues, or other unforeseen circumstances beyond our control.