Definition – What does One Cancels The Other Order (OCO Order) mean?
A one cancels the other order (OCO order) is an combination of two pending market orders for the same currency pair. The execution of one of the orders results in the cancellation of the other. An OCO order can be used to enter a trade where a strong move is expected, but the direction is unclear.
ForexTerms explains One Cancels The Other Order (OCO Order)
For example, if a trader doesn’t have an open position in the USD/JPY but notices it is staying in a narrow range of support and resistance, he can put in a one cancels the other order to buy the pair if it exceeds the resistance level, for example 77.8510, and another order to sell the pair if it falls below the support line, 77.8480. If the USD/JPY drops below 77.8480, the sell order is executed and the buy order is cancelled.
On an open position, the same effect is created with a stop loss and a take profit order, as one naturally cancels the other.