OCO order

An OCO (One Cancels the Other) order links two pending orders, typically a stop-loss and a take-profit, to the same position. If either the stop-loss or the take-profit order is filled, the other linked order is automatically cancelled. This mechanism ensures that only one of the two potential outcomes for a trade can occur, preventing unintended exposure if market conditions rapidly change.

For a retail trader, an OCO order is a risk management tool that automates trade exits. It allows a trader to define both their maximum acceptable loss and their target profit level simultaneously. This helps enforce discipline, preventing emotional decisions during volatile market movements. It also ensures that a trade is closed if either condition is met, even if the trader is not actively monitoring the market.