Order-Sends-Order (OSO/OTO)
Contents
Unlocking the Power of Order-Sends-Order (OSO/OTO) in Trading
Demystifying Order-Sends-Order (OSO/OTO)
Understanding OSO/OTO: Order-sends-order (OSO), also known as order-triggers-other (OTO), is a sophisticated trading strategy involving conditional orders. These orders stipulate that the execution of a primary order automatically triggers the placement of one or more secondary orders.
Exploring the Concept:
Traders utilize OSO/OTO conditions to streamline their trading activities, enabling them to establish entry and exit points with a single order. For instance, a buy limit order may be set with a condition that, if executed, triggers a corresponding sell order at a predetermined profit level. Similarly, OSO/OTO conditions can be employed to implement stop-loss measures, automatically exiting positions if certain price thresholds are breached.
Complexity and Layering:
While OSO/OTO conditions typically involve the triggering of one additional order, traders can introduce complexity by layering multiple conditions. For example, a bracketed order involves the execution of a primary order triggering two additional orders, thereby setting both profit-taking and stop-loss levels simultaneously.
Examples of OSO/OTO Orders:
In practice, OSO/OTO orders manifest in various forms. A common example is the bracketed buy order, where a primary buy order automatically triggers secondary sell limit and sell stop orders, effectively establishing maximum potential gains and losses for the position. Another scenario involves the execution of a primary order prompting the placement of secondary orders to buy or sell additional stocks, potentially leveraging the movement of bellwether stocks within the same industry or sector.