The One Cancels Other (OCO) order stipulates that if one part of the order is executed, the other part of the order will be automatically cancelled.

The One Cancels the Other (OCO) order does just that; if one order is executed, the second order is cancelled. Effectively it means that you place two orders simultaneously, but run with the trade that triggers first.

Let's say a trader wants to do one of two things; either go long (to buy) Westpac CFDs should the price break above $23.30, or go short (to sell first and buy back later) should the price drop to $23.00. If $23.30 is triggered, then the trader will take the long trade and cancel the short trade. But if the $23.00 order is triggered, they will take the short trade and cancel the long trade. This order is used when a particular CFD or market may have been trading within a range and a break outside the range may allow the trader to take advantage of a move upward or downward.

The OCO order is also useful for taking profits and limiting losses by using a combination of a ‘limit’ and a ‘stop’ order. Let's say a trader is long 2000 BHP CFDs at $27.70, but will cut the position should BHP fall to $27.00. The first part of the order is therefore a ‘stop sell’ at $27.00. But if the market rallies, they will exit the trade at $28.40 and take profits. The second part of the trade involves placing a ‘limit sell’ at $28.40. Whichever order is executed first, the other order is cancelled automatically.