What an OCO order is and when to use it

An OCO order stands for "One-Cancels-Other." It lets you place two linked orders at the same time: one to sell at a higher price (your profit target) and one to sell at a lower price (your stop loss). When one order fills, Robinhood automatically cancels the other. This means you do not have to sit and watch your position — the order you set up first will execute, and the backup order vanishes.

OCO orders are useful when you want to lock in gains if a stock rises, but also protect yourself if it falls. Instead of placing one order and hoping to catch the market at the right moment, you set both boundaries upfront. Robinhood executes whichever condition hits first.

OCO orders work on stocks and ETFs in Robinhood's standard brokerage account. They do not work on options, crypto, or fractional shares. You also cannot use OCO orders in a retirement account (IRA or 401k) through Robinhood.

Key Takeaways

  • An OCO order pairs a profit-taking order with a stop-loss order, and whichever one fills first cancels the other automatically.
  • You set up an OCO order from the stock detail page by tapping the order button, selecting "Advanced," and choosing "OCO" from the order type menu.
  • You must enter a quantity, a limit price for the profit order, and a stop price for the loss order before you can submit.
  • OCO orders only work on stocks and ETFs in a standard taxable account, not on options, crypto, or retirement accounts.
  • If market conditions move fast, one leg of your OCO may fill at a worse price than you set, or both orders may cancel if the stock gaps past both prices.

Step-by-step: setting up your OCO order

Open Robinhood and navigate to the stock or ETF you want to trade. Tap the order button (usually a pencil icon or "Trade" button at the bottom of the screen). This opens the order entry screen.

At the top of the order screen, you will see order type options. Tap "Advanced" to reveal the full menu. Scroll down until you see "OCO" listed among the order types. Tap it to select it.

Now you will see two order sections stacked on top of each other. The top section is your profit order (the higher price where you want to sell). The bottom section is your stop-loss order (the lower price where you want to exit if the stock drops). Enter the number of shares you want to sell in the "Quantity" field — this quantity applies to both orders.

In the top section, enter your limit price (the price at which you are willing to sell for profit). In the bottom section, enter your stop price (the price that triggers the sale if the stock falls). Review both prices to make sure they make sense for your position. Tap "Review Order" and then "Submit" to place the OCO.

Understanding the two legs of an OCO order

The profit leg (top order) is a limit order. It sits in the market and waits for the stock to reach your target price or higher. If the stock climbs to that price, your shares sell at that price or better. This is how you lock in gains.

The stop-loss leg (bottom order) is a stop order. It does nothing until the stock falls to your stop price. Once the stock hits that price, the order converts to a market order and sells your shares at the next available price. This protects you from larger losses, though the actual sale price may be lower than your stop price if the market is moving fast.

The moment one leg fills, the other cancels. If your stock rises and hits your profit price first, the stop-loss order disappears and you keep your gains. If the stock falls and hits your stop price first, the profit order cancels and you exit the position to limit damage.

Common mistakes and how to avoid them

The most common error is setting prices too close together. If your profit target and stop price are only a few cents apart, normal stock movement might trigger the stop-loss by accident before the stock ever reaches your profit target. Leave enough room between the two prices to account for normal daily volatility.

Another mistake is forgetting that the stop-loss leg is a market order once triggered. If the stock gaps down past your stop price (for example, bad earnings news overnight), your shares will sell at whatever price the market offers, which could be significantly lower than your stop price. OCO orders protect you from having to act, but they do not may provide a specific exit price on the stop side.

Do not assume an OCO order will execute if the stock moves sideways. If your stock stays between your profit price and stop price, both orders sit unfilled. You will still own the shares and will need to cancel the OCO manually if you want to exit or adjust it.

What happens if the stock gaps past both prices

In rare cases, a stock can move so fast that it jumps past both your profit price and your stop price without either order filling. This happens most often at market open after overnight news, or during earnings announcements. When this occurs, both orders cancel automatically and you are left holding the shares with no active orders.

If this happens, you will need to place new orders manually. Check the current price and decide whether to set new profit and stop prices, or exit the position outright. Robinhood will notify you that the OCO was cancelled, but you are responsible for acting next.

Viewing and cancelling your OCO orders

To see your active OCO orders, open the "Orders" tab at the bottom of the Robinhood app. You will see all open orders listed, including any OCO orders. An OCO order appears as a single entry that shows both the profit price and the stop price.

To cancel an OCO order before it fills, tap on it and select "Cancel Order." This cancels both legs at once. You will own the shares again with no active sell orders. If you want to modify an OCO (change the prices or quantity), you must cancel the existing order and place a new one — Robinhood does not allow you to edit an OCO in place.

OCO orders and taxes

When an OCO order fills, Robinhood reports the sale to the IRS just like any other stock sale. The sale price, date, and quantity are recorded in your account history and will appear on your tax documents at year-end. If you sold at a profit, you owe capital gains tax on the difference between your purchase price and your sale price. If you sold at a loss, you may be able to deduct that loss against other gains.

Keep records of your OCO orders and their execution prices. When you file your taxes or work with a tax preparer, you will need to know the exact sale price and date for each trade. Robinhood provides this information in your account statements and tax documents, but having your own records is helpful.

Frequently Asked Questions

Can I use an OCO order on options or crypto?

No. Robinhood only supports OCO orders on stocks and ETFs in a standard taxable brokerage account. Options, cryptocurrency, and retirement accounts (IRA, Roth IRA, 401k) do not support OCO orders. You will need to place separate orders for those asset types.

What if my stop-loss order fills at a much worse price than I set?

The stop-loss leg of an OCO is a market order once triggered, so it sells at the next available price. If the stock is falling fast or there is low trading volume, that price could be significantly lower than your stop price. This is a real risk of stop orders. To reduce it, you can set your stop price closer to the current price, but this increases the chance of being stopped out by normal movement.

Can I place an OCO order on a stock I do not own yet?

No. You must own the shares before you can place an OCO order to sell them. If you want to buy a stock and set up profit and stop prices at the same time, place a buy order first, then set up the OCO once you own the shares.

Do OCO orders work during pre-market and after-hours trading?

OCO orders are active during extended hours (pre-market and after-hours), but liquidity is much lower. Your orders may fill at worse prices or not fill at all during these times. Most traders place OCO orders during regular market hours (9:30 a.m. to 4 p.m. ET) when volume and price stability are higher.

What if I want to change my OCO order prices?

You cannot edit an OCO order once it is placed. You must cancel the existing OCO and place a new one with the updated prices. Cancelling does not affect your shares — you will still own them and can place a new OCO when ready after.