Definition of OCO Order
What is the definition of an "OCO Order"? What does the term "OCO Order" mean?
"OCO" in "OCO Order" stands for "One Cancels Other".
Let's say that you currently own 100 shares of MSFT, and your average price is $25.
Let's say that you want to sell your shares if one of two things happens:
a) MSFT hits $30/share
b) MSFT hits $20/share
In the case of a), you are taking profits, while in the case of b), you are selling for a loss.
In this case, you can set a OCO Order. Your OCO Order would consist of two different orders:
1) Sell 100 shares of MSFT if it hits $30
2) Sell 100 shares of MSFT if it hits $20
If either order executes, the other order will be cancelled. Hence the term, "One Cancels Other".
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