OCO Order (One Cancels the Other)
An ´OCO´ (´One Cancels the Other´) Order is a special type of Order where a Stop Order and a Limit Order in the same market are linked together. With an OCO Order, the execution of one of the two linked Orders results in the automatic cancellation of the other Order.
You sold USD/CHF 500´000.-- at 1.2290, looking for a short-term move to 1.2260. However you decide that if USD/CHF moves above 1.2310 you want to cut out your position. You put on a Limit Order to buy USD/CHF 500´000.-- at 1.2260, and a Stop Order to buy USD/CHF 500,000.-- at 1.2310 on an OCO basis. This order will close your position with a 30-pip profit if Limit Order is reached first, or with a 20-pip loss if Stop Order is reached first.