One Cancels the Other Order (OCO)
A One Cancels the Other Order (OCO) is a type of order that combines two separate orders into one. It is used by traders to manage risk and to ensure that one of the orders is executed. The OCO order is composed of two parts: a stop order and a limit order. The stop order is triggered when the price of the asset reaches a certain level, while the limit order is triggered when the price of the asset reaches a different level. When one of the orders is executed, the other order is automatically canceled.
History of the Term
The term One Cancels the Other Order (OCO) was first used in the late 1980s by the Chicago Board of Trade (CBOT). The CBOT was the first exchange to offer OCO orders, and they quickly became popular among traders. Since then, OCO orders have become a standard feature of most trading platforms.
Comparison Table
| Order Type | Stop Order | Limit Order |
|---|---|---|
| Trigger Price | Price reaches a certain level | Price reaches a different level |
| Execution | One order is executed | The other order is canceled |
Summary
One Cancels the Other Order (OCO) is a type of order that combines two separate orders into one. It is used by traders to manage risk and to ensure that one of the orders is executed. When one of the orders is executed, the other order is automatically canceled. For more information about OCO orders, traders can visit websites such as Investopedia, The Balance, and Investing.com.
See Also
- Stop Order
- Limit Order
- Market Order
- Stop Limit Order
- Trailing Stop Order
- Fill or Kill Order
- Immediate or Cancel Order
- All or None Order
- Good Till Canceled Order
- Day Order
