An OCO (one-cancels-the-other) order links two orders so that when one fills, the other is automatically cancelled — typically a profit target and a stop-loss. It’s the logic that manages an exit cleanly.

How it works

You place two exit orders on a position at once: a limit to take profit above, and a stop to cut losses below. They’re linked — if the target hits, the stop cancels; if the stop hits, the target cancels. Without OCO linkage, both could fire (leaving you accidentally short), so OCO ensures only one exit executes.

Why it matters

OCO is what makes a “set my exits and walk away” approach safe — you define both the good outcome and the bad outcome, and exactly one happens. It’s the exit half of a bracket order (a bracket is an entry plus an OCO exit pair), and it’s core to pre-committed, hands-off exits.

An OCO is a clean either/or: take the profit or take the loss, never both. It’s what lets you set both exits and trust only one fires.

The takeaway

OCO orders let you manage a position with a linked target and stop that resolve to exactly one exit — disciplined and hands-off. Most brokers expose OCO inside a bracket ticket; if yours does, use it, because deciding both exits once and letting the market pick between them is the cheapest discipline you will ever buy.