OCO Order: One Cancels the Other for Bracketed Trades
Macro Glossary, Orders and Risk
By Ken Chigbo, macro trader and founder of KenMacro, 18+ years in markets.
Updated 2026-05-20
The desk’s answer
An OCO order (One Cancels the Other) pairs two resting orders so that the execution of one automatically cancels the other. The standard use is bracketing an open position with a take profit on one side and a stop loss on the other; when either fills, the broker cancels the partner order. It is also used for breakout setups where a buy-stop above resistance and a sell-stop below support are placed simultaneously, with the order that triggers first cancelling the other. OCO logic is built into MT4, MT5, cTrader and most professional platforms.
Defined term, OCO order
An OCO (One Cancels the Other) order pairs two resting orders, typically a take profit and a stop loss, so that the execution of one automatically cancels the other. It is the standard mechanism for bracketing an open position with defined exits on both sides and preventing the trader from being left with an orphan order after one side fills.
How OCO orders work
The trader places two linked orders simultaneously, identified to the broker as an OCO pair. The pair sits in the order book as two normal resting orders. When the market reaches the price level of either order, that order executes and the broker’s order engine immediately cancels the partner. The two orders never both fill, even if the market moves to both price levels in fast succession; the engine processes the trigger of the first order and the cancellation of the second as a single transaction. This eliminates the risk of being left with an orphan order after one side has filled, a common manual-management error.
Standard OCO uses
Three patterns. First, bracketing an open position: take profit above for a long, stop loss below, both as an OCO pair. When TP fills, the SL is cancelled; when SL fills, the TP is cancelled. This is the default risk-management discipline on any trade held overnight. Second, breakout trading: a buy-stop order above resistance and a sell-stop order below support, placed simultaneously as an OCO pair. When the market breaks one side, the order triggers and the partner is cancelled; the trader is positioned in the direction of the actual break. Third, range trading: buy-limit at the bottom of the range and sell-limit at the top, as an OCO, with the first to fill cancelling the other and the trader entering on whichever side touches first.
Limitations and edge cases
Two cautions. First, not all brokers implement true server-side OCO; some require client-side software to monitor both legs, which fails if the platform disconnects. Verify on a funded account that the OCO pair is server-side, not platform-side. Second, in extreme fast markets the order engine can struggle with the cancellation, occasionally allowing both orders to fill if the second order touches its level within a few milliseconds of the first executing. This is rare but documented; for a critical OCO setup, monitor live during high-volatility events.
Frequently asked
What is an OCO order?
One Cancels the Other order, a pair of linked resting orders where the execution of one automatically cancels the other. The standard use is bracketing an open position with a take profit and stop loss, or placing a breakout setup with buy-stop and sell-stop orders simultaneously.
How do I bracket a trade with OCO?
Place the take profit order (limit) on one side of the open position and the stop loss order (stop) on the other side, both linked as an OCO pair. The broker’s order engine will execute whichever order is hit first and cancel the other automatically. Standard on most modern trading platforms.
Are OCO orders server-side?
On most regulated brokers yes, with the OCO logic executed by the broker’s order engine. Some smaller brokers implement OCO client-side via the platform software, which fails if the platform disconnects. Verify server-side execution on a funded account before relying on OCO for critical risk management.
What this means at the desk
Bracket every overnight trade with OCO. The discipline is server-side execution that does not depend on a running terminal.
Read next from the desk
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