OCO order in gold trading

An OCO (one cancels the other) order is a pair of linked orders: as soon as one is executed, the other is cancelled. It is used when a trader wants to act on whichever of two outcomes happens first, without ending up in both.

How it applies to gold trading

The classic gold use is a range breakout: a buy stop above the Asian range high and a sell stop below its low. Whichever side breaks first opens the trade and the other order disappears. Without OCO, a whipsaw that breaks one side and then the other can fill both orders, leaving a hedged or doubled position.

Not every platform supports OCO natively. MT4 and MT5 do not have a built-in OCO type; traders use an expert advisor or cancel the second order by hand. Some futures and web platforms offer it as a standard order type. Stop-loss and take-profit orders attached to one position already behave as an OCO pair, since one closing the trade removes the other.

Worked example

Example (hypothetical numbers): the Asian range is 3,996 to 4,008. You place a buy stop at 4,010 and a sell stop at 3,994 as an OCO, each 0.20 lots with a $6 stop. London breaks higher and fills the buy at 4,010; the sell stop is cancelled. Your risk is $6 × 100 × 0.20 = $120 on one trade, not two.

A common mistake

Placing both breakout orders without linking them and forgetting the second one after the first fills.

See also: Pending order, Bracket order, Asian range, Breakout.

Frequently asked questions