New Conditional Order Type Tutorial 1: One-Cancels-the-Other (OCO) Order

Available for Hong Kong and US stocks

A OCO order includes a pair of limit order and stop limit order. When either the limit order is fully filled or the trigger price of the stop limit order is reached, the other order is automatically canceled. 

This trading strategy empowers members to effectively manage their risk and more easily to determine their entry and exit points. By utilizing OCO orders, members can automate their trading strategies, minimizing the need for continual market monitoring. 

In volatile market conditions, this strategy offers improved risk management and responsiveness to rapid price swings. 

Both limit order and stop limit order within the OCO order type support sell order only.This allows members to set both a target limit price to lock in profits and a stop limit price to manage their risk, all within a single OCO order. Below are some of the possible scenarios to consider using the OCO order.

For example : 

If you have a stock in your portfolio that you believe has good upside potential, but you also want to protect yourself against significant downside risk. You can consider using a OCO order to achieve this.

Suppose you previously bought 100 shares of a stock at $47 and the nominal price now is $50. You can consider to place an OCO order as below:

1. Limit Order: Sell “Quantity” 100 shares at “Limit Price” $55 (your target price to lock in profits)
2. Stop Limit Order : Set the “Trigger Price” at $45.2, and Sell 100 shares at “Stop Limit Price” $45 (your stop loss price to manage risk)

Scenario 1

If the nominal price rises and reaches $55 as you expected, and the 100 shares of the limit order are being fully executed, the stop limit order will be automatically canceled.

Scenario 2

If the nominal price drops and reaches $45.2 or below, the stop limit order will be placed in the market, and the limit order will be automatically canceled.

Notes: 

1. In case of partially filled limit order, the unfilled limit order quantity remains active in the market, the position size of the other stop-limit order in the OCO pair will be adjusted accordingly based on the unfilled limit order position size.

More detailed information is available in the FAQ “What is a conditional order” section for your reference.

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