What Is an Order-Sends-Order (OSO/OTO)?
An order-sends-order (OSO), also commonly known as an order-triggers-other/one-triggers-other (OTO), is a set of conditional orders stipulating that if one order executes (the primary order), then the other orders are automatically entered (the secondary order or orders). There are several examples of OSO/OTO orders, including bracketed orders and take-profit strategies. Experienced traders use OSO/OTO orders to mitigate risk and to lock in gains.
OSO orders may be contrasted with order-cancels-order (also known as one-cancels-the-other) (OCO) orders that cancel, rather than trigger, additional orders.
Key Takeaways
- An order-sends-order (OSO) is a type of conditional order in which the execution of a primary order triggers the placement of one or more secondary orders.
- Also known as order-triggers-other (OTO), these compound conditional orders can be used to mitigate losses and lock in profits on a new position.
- OSO/OTO orders also can be created that take advantage of the position of some stocks as bellwethers for their industries or sectors.
- An OSO/OTO order are, in effect, the opposite of an order-cancels-order/one-cancels-the-other (OCO) order, in which execution of a primary order cancels one or more other orders.
Understanding Order-Sends-Order (Order-Triggers-Other)
Traders can use an order-sends-order/order-triggers-other condition to generate entry and exit points with one order. For instance, a buy limit order may be placed on a stock at a level that is 5% below the current market with an OSO/OTO condition that if this first order is filled, a second limit order to sell be placed at a level 10% above that buy. The sell order will only be placed if the buy order is executed, thus automatically setting a take profit level with the broker.
If the primary order is canceled, it cancels the secondary order automatically. If, however, a secondary order is canceled, it typically leaves the primary order active as a regular order.
An OSO/OTO condition can also be used in order to limit losses. Say the trader has the same buy limit specified 5% below the current market price. If this order is filled, the order that is triggered could then be a stop-loss at a level 10% below that price, to automatically exit the position if the market drops.
In these cases, the condition is to trigger one additional order. However, these conditions can be layered and made more complex. For instance, a bracketed order (explained in greater detail below), involves a fill triggering two additional orders, making it anorder-triggers-two (OTT)condition. Many online brokerage platforms allow for as many additional orders to be triggered depending on the trader's strategy.
In one modification of this type of condition, a one-triggers-a-one-cancels-the-other (OTOCO) order triggers two orders, as in an OTT condition. However, if either one of the second orders is subsequently filled, it cancels that remaining order.
Examples of OSO/OTO Orders
In a bracketed buy order, a buy order has a sell limit order and a sell stop order attached, the latter two secondary orders being entered automatically once the primary buy order is executed. The sell limit order gets priced above the buy order and the sell stop order, or stop-loss order,gets priced below the buy order. In this application of an OSO/OTO, the trader has set maximum possible gains and losses on their position. Of course, if the primary buy order is not executed for whatever reason, then the secondary orders are never entered. A bracketed sell order would have similar conditions, but in reverse.
In another example of an OSO/OTO, a trader enters a limit order to purchase a particular stock. If this primary order is executed, then it will trigger one or more secondary limit orders to buy other stocks, perhaps in the same industry or sector. This OSO/OTO also may include the placement of sell limit orders or sell stop orders on one or more of these stocks, as in the bracketed buy order example outlined above. In this scenario, the trader may be anticipating that when a bellwether stock becomes an attractive buy, the same will hold true for secondary stocks that are included in the OSO/OTO.
FAQs
For example, there is an OSO order consisting of three orders. The primary order 1) is a limit order to buy 1000 shares of a symbol, and attached to it are two other orders: 1) a limit order to buy 500 shares of another symbol in the same industry and 2) an stop order for 1000 share of the primary symbol at a price .
What is order sends order? ›
An order-sends-order (OSO) is a type of conditional order in which the execution of a primary order triggers the placement of one or more secondary orders. Also known as order-triggers-other (OTO), these compound conditional orders can be used to mitigate losses and lock in profits on a new position.
How does the Oco order work? ›
A one-cancels-the-other (OCO) order is a pair of conditional orders stipulating that if one order executes, then the other order is automatically canceled. An OCO order often combines a stop order with a limit order on an automated trading platform.
What is an example of a buy stop order? ›
If a stock is trading for $33 per share and technical indicators hint at an uptrend, the investor can place a buy-stop order at $34. If the price reaches $34, the order gets executed and becomes a market order buying the stock at $34 if available or the next price.
What does oso mean? ›
noun. bear [noun] a large heavy animal with thick fur and hooked claws.
What is Oso bracket order? ›
An OSO (Order Sends Order) order consists of a primary order that will send one or more secondary orders when the primary order is filled.
Does order sent mean delivered? ›
Order shipped refers to the status of a package sent out from the warehouse or seller's location and is in transit to the buyer's address. Order delivered means the parcel has successfully reached its intended destination and has been received by the buyer at the specified delivery address.
What is an example of a limit order? ›
A trader who wanted to buy the stock only if it dropped to $133 would place a buy limit order with a limit price of $133 (green line). If the stock fell to that level or lower, the limit order would be triggered and the order would be executed at $133 or below.
How does delivery order work? ›
A delivery order is a document that can be issued by the owner of freight, consignee, shipper or a carrier to deliver the goods to another party. A delivery order should be differentiated from the bill of lading. The delivery order is not a negotiable document and it does not act as evidence or receipt of goods.
What are examples of OCO? ›
An example of OCO
So, if Tesla stock is trading at $100, and you think the electric vehicle manufacturer is a sinking ship, you can set your traditional stop-loss order to sell at $99 to cut your losses. But with an OCO order, you can both set it to sell at $99 and at the same time, set it to sell at $101.
Placing an OCO Order
Highlight the Trade button. Select Spot Trading. Click Stop-Limit followed by OCO in the drop-down box. Specify the limit price, the stop price, and the stop-limit price.
Who pays payment for order flow? ›
In the PFOF model, the investor starts the process by placing an order through a broker. The broker, in turn, routes this order to a market maker in exchange for compensation. The market maker then executes the order, aiming to profit from the spread or other trading strategies.
What is a short stop order? ›
A Stop-Short order is an order that will be transformed to a market order only when the market price reaches the stop price or below. To have an efficient Stop-Short order, you will have to place a target price that is lower than the market price.
What is a stop order payment? ›
What Is a Stop Payment on a Check? A stop payment is a formal request made to a financial institution to cancel a check or payment that has not yet been processed. A stop payment order is issued by the account holder and can only be enacted if the check or payment has not already been processed by the recipient.
What is a short stop limit order example? ›
A short position would necessitate a buy-stop limit order to cap losses. For example, if a trader has a short position in stock ABC at $50 and would like to cap losses at 20% to 25%, they can enter a stop-limit order to buy at a price of $60 and a limit price of $62.50.
How do I place an OCO order? ›
Placing an OCO Order
Highlight the Trade button. Select Spot Trading. Click Stop-Limit followed by OCO in the drop-down box. Specify the limit price, the stop price, and the stop-limit price.
What is a one triggers another order? ›
A One Triggers Other Order, or OTO Order, is a type of trading order where the execution of one order automatically triggers the placement of one or more additional orders.
What is bracket order in trading? ›
Bracket order is a distinctive type of market order generally placed during intraday trading. This type of order blends a buy order with a target and stop-loss order. These orders are further essential for helping stock traders hold a favourable position after a trading session comes to an end.
