One Cancels the Other (OCO)
Chapters in this video
- 0:00 The two-alarms analogy: how OCO links two orders
- 1:37 Formal OCO definition: one fill auto-cancels the other
- 1:48 Bracketing a long futures position with Trey the trader
- 3:51 Placement trap: limit above, stop below on a long
- 3:51 Order types master comparison: GTC, FOK, MOC, and OCO
- 5:16 FOK versus IOC versus AON: the immediate-and-full-size trap
- 5:30 Rapid-fire exam recap
What this video covers
- What a one cancels the other (OCO) order is: two orders entered together and linked, so that when one is executed (filled), the other is automatically canceled
- Why only one leg of an OCO pair can ever execute, and that the market does not care which leg fills first
- How traders bracket a position with a profit-target limit order above the market and a protective stop order below the market as an OCO pair
- The classic long-futures bracket: sell limit above for profit, sell stop below for protection, and why flipping the placement is wrong
- Why a fill on either leg triggers automatic cancellation of the other leg with zero manual action from the trader
- How fill-or-kill (FOK) differs from immediate-or-cancel (IOC) and all-or-none (AON): FOK alone demands both immediate execution and full size
- How OCO compares to good till canceled (GTC), market on close (MOC), and FOK on the exam's favorite order-type comparison questions
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