With the complex interactions between data providers, introducing brokers, execution platforms, and the exchanges, there can be confusion between OCO orders and OSO orders. This article will go into detail on the definitions, the differences, and the practical executions of these terms.
OCO Orders
An OCO order is an Order Cancel Order. When enacted, an OCO places two orders, a limit order, and a stop limit order. When either of these orders fills it will automatically cancel the other. This can be a useful form of order automation to protect gains and limit losses. For most execution platforms, these types of orders reside server side on most data providers which means that once placed, the order should reside on the data provider's servers. This is important in case the client side loses connection to the market data, the cancelation should still go through.
OSO Orders
An OSO is an Order Send Order. When enacted, an OSO places two orders either to buy or sell at two points in the price ladder. If the first order is filled, the second order will automatically be placed. This can be placed to maximize profits on a swing. For most execution platforms, including EdgeProX, these types of orders reside platform side which means that once placed, the order resides with the execution platform. This is important to note as if the initial OSO is placed, and the execution platform loses connection to the market data, the second trade will not be executed on.
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