An OCO, also known as “One Cancels the Other” is a pair/pairs of orders wherein the execution of one order automatically cancels the other. It is the other name for a bracket order and aims at minimizing your losses. The Upstox OCO order includes 3 subsequent orders in a single order.
In Upstox, it is basically a stop-loss order to maximize profits in a given situation. Such orders are best suited for intraday trades where a specific target price is fixed.
In what follows, discussed are the various traits of the Upstox OCO order. Stay tuned!
Upstox OCO Order
As already mentioned, the Upstox OCO order is a bracket order not only “limits losses” but also “locks profit” by placing 2 more orders side by side (just like a bracket).
One single Upstox OCO order places 3 subsequent orders namely:
A buy/sell position initiation order (must be a limit order only)
A square off/take profit order
A stop-loss order
If and when the parameters set by you are met, any of the two orders are executed which automatically cancels the “third order”. This is why it is known as an OCO / One Cancels the Other order.
Example Of An Upstox OCO Order
Let’s assume that you placed a “buy” initial positioning order at ₹3,000. Now, you set the target price of the square-off “sell” order at ₹10 absolute profit. This means that you will have a profit it the price hits ₹3,010 or above.
Further, you set the stop loss target price at ₹5 with ₹1 as the trailing stop-loss value. This means that the loss amount will trail up or down every time the price changes by ₹1.
When you submit the order, the initial positioning “buy” order will be sent to the exchange first. Then the other two orders, i.e. the square off and the stop-loss orders will be sent subsequently. In this case, the square of “sell” order will be placed if the price hits ₹3,010 first while a stop-loss order will be placed if the price hits ₹3,005 first.
If the price changes to ₹3,001, the trailing stop-loss algorithm will automatically change the stop-loss price to ₹3,006. The trailing will keep happening in ₹1 installments until the price reaches ₹3,010 which is the target price for the “Square Off / Take Profit” order.
If the target price of the square-off order hits first, the stop-loss order is automatically canceled and vice versa.
Upstox OCO Order Margin
The Upstox OCO order margin/leverage requirements are calculated on the following factors:
The price difference percentage between the stop-loss order and the initial positioning order placed on the last traded price (LTP)
The minimum margin percentage of the traded value
Assume that you bought a Upstox OCO order on NIFTY Futures at the LTP of ₹4000. As per the rules, the stop-loss order price must be within 5% of the buy order price.
Therefore, the minimum margin percentage, in this case (NIFTY Futures), is 2.5%.
The margin benefits involved in an OCO order is somewhat similar to that of a cover order. Note that Upstox’s RMS team auto squares off all open positions under the MIS/BO/OCO/CO segments during the last 30 minutes of the market closure.
How To Place OCO Order In Upstox?
Here’s how you place an OCO order on the Upstox platform: