One-cancels-other order

A one-cancels-other (OCO) order is a pair of conditional orders linked so that if one fills, the other is automatically canceled. Typically used to handle two mutually exclusive outcomes: you place a profit-target limit order above the market and a stop-loss stop order below, then wait for one to trigger. Whichever fills first automatically cancels the other.

How an OCO order works

Suppose you buy 100 shares of a stock at $100. You want to:

• Take profit if the stock rises to $105 (your upside target).
• Cut losses if the stock falls to $95 (your downside risk tolerance).

Instead of placing two separate orders and manually canceling one, you place an OCO order:

• Leg 1: Limit order to sell 100 at $105.
• Leg 2: Stop order to sell 100 at $95.

Both orders are now active. If the stock rises to $105, Leg 1 fills, and Leg 2 is automatically canceled. If the stock falls to $95, Leg 2 is triggered (becomes a market order) and fills, and Leg 1 is canceled. Either way, you are out, and you did not have to monitor or manually cancel anything.

The benefit: one outcome, not two

Without an OCO order, you have to actively manage two separate orders:

• Place a limit at $105 and a stop at $95.
• Watch the market.
• If the limit fills, cancel the stop manually.
• If the stop fills, cancel the limit manually.

If you forget to cancel, you could accidentally double-exit: the limit fills at $105, but you forget to cancel the stop, and then the stock falls to $95 and the stop fills as well, short-selling 100 shares. Now you have unwanted leverage.

An OCO order removes that human risk. The moment one leg fills, the other is gone.

Structure variations

The classic OCO is profit-target + stop-loss, but the structure is flexible:

• Buy OCO: Limit order to buy below market + stop order to buy above market. Used when you want to enter a position on either a pullback (limit) or a breakout (stop).
• Sell OCO: Limit order to sell above market + stop order to sell below market. Used to exit with profit or cut loss.
• Both at market: Two market orders, with OCO logic. Less common, but used for ultra-fast execution in fast markets.

OCO orders vs. bracket orders

The main difference between an OCO and a bracket order:

• An OCO is two separate orders that you submit yourself, linked by the broker’s logic. You decide where to place each leg.
• A bracket order is a bundle: one primary order (entry) plus two children (profit-taking limit + stop-loss). When the primary fills, the two children automatically become active.

A bracket order is more structured for a common pattern (entry, then choose exit). An OCO is more flexible for situations where you already have a position.

Limitations and broker support

Not all brokers support OCO orders. Many online brokers (Schwab, Fidelity, Interactive Brokers) do; some discount brokers do not. Those that do support OCO sometimes charge a small fee (a few cents per order).

When OCO is unavailable, a common workaround is to use a bracket order (if the broker supports that) or to manually submit the two orders and set phone reminders to cancel the loser.

OCO orders and partial fills

If your profit-target limit order partially fills (e.g., 60 shares out of 100 fill at $105), does the stop order cancel? This depends on your broker’s implementation:

• Some brokers cancel the entire OCO if any leg partially fills.
• Others keep both legs active, with the stop quantity adjusted to match the remaining position.

Read your broker’s documentation carefully. The last thing you want is a nasty surprise: you intended to exit your entire position, but only half of it filled, and the other half is now unprotected.

Practical use cases

Swing trading. You buy a stock expecting a 5% move, but you do not want to lose more than 2%. You place an OCO: profit target at +5%, stop at -2%. Whichever comes first wins.

Mean reversion. You are betting a stock falls from $100 to $95, but you are wrong about the direction. You place an OCO to cover short: buy limit at $95 (if you are right) or stop at $105 (if the trend is too strong). One of them will eventually fill.

Overnight or vacation. You are holding a position but will be away from a screen. Instead of worrying, place an OCO: profit at your upside target, stop at your loss tolerance. You are automatically exited, no monitoring required.

See also