One-Cancels-The-Other (OCO) Orders
One-Cancels-The-Other orders are just another type of orders which traders can use to minimize the effect of market volatility. The practice of OCO orders is much more common in Forex trading compared to stock and futures trading. One-Cancels-The-Other orders, as the name suggests, are combination of two orders, of which execution of one order will trigger the cancellation of other order.
The trader can place orders for trading two stocks, currencies or for other financial instruments. Both orders will stay live on market, unless the start of execution of one of them. The broker will start executing the trades with maximum profit chance or minimum loss. The starting of execution automatically triggers the canceling of other order and the second order is cancelled even if the first order is partially executed.
Like stop-limit orders, most brokers charge more fees for executing OCO orders. OCO orders become handy when you are not sure about the market direction or the future of currencies. One-Cancels-The-Other orders are also useful for beginner traders, as they give them a change to experiment with market directions with minimum trading risks; they are also useful for traders who are not so dedicated to spend much time for trading. Also remember that not all brokers allow OCO orders and fees may differ considerably.
The trader can place orders for trading two stocks, currencies or for other financial instruments. Both orders will stay live on market, unless the start of execution of one of them. The broker will start executing the trades with maximum profit chance or minimum loss. The starting of execution automatically triggers the canceling of other order and the second order is cancelled even if the first order is partially executed.
Like stop-limit orders, most brokers charge more fees for executing OCO orders. OCO orders become handy when you are not sure about the market direction or the future of currencies. One-Cancels-The-Other orders are also useful for beginner traders, as they give them a change to experiment with market directions with minimum trading risks; they are also useful for traders who are not so dedicated to spend much time for trading. Also remember that not all brokers allow OCO orders and fees may differ considerably.
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posted by Daniel Pipitone at
3:55 AM
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