What is an OCO order?
- Author
- CRYPTO PORT Editorial
- Published
- Updated
- Reading time
- 4 min
In short
An OCO places two orders at once and cancels one automatically when the other fills. It is the standard way to set a take-profit and a stop-loss together. The cancellation is automatic, but when both could trigger at once the outcome depends on the exchange's processing order.
Key points
- One fill cancels the other order automatically
- Lets you set take-profit and stop-loss together
- Partial-fill handling varies between exchanges
- Simultaneous triggers depend on processing order
Definition
Short for One Cancels the Other: two linked orders submitted together, where the execution of one automatically cancels the other.
A typical use: on a long opened at 5,000,000 yen, you place a limit sell at 5,500,000 and a stop sell at 4,500,000 as an OCO. If the upper order fills, the lower one disappears, and vice versa. Since there is only one position, it cannot be closed twice.
Without that automatic cancellation things go wrong quickly. Submit the two separately and, once one fills and the position is flat, the other can still execute and open a brand-new position on the opposite side. OCO exists precisely to prevent that.
It is not airtight, though. How the remaining leg's quantity is adjusted after a partial fill differs by exchange, and if a violent move satisfies both conditions at once, which one is processed first comes down to the platform's implementation.
Watch out for
- · Whether the remaining leg is resized after a partial fill depends on the exchange
- · If a fast move satisfies both conditions, the leg that fills may not be the one you expected
- · An OCO not tied to a position can open a new one after the first is closed