Page 1 : Page 2 : Page 3 : Page 4 : Page 5 : Page 6 : Page 7 : Page 8

Good For The Day Order

• A 'good for the day' is just that, an order that is only good for that day's business
• It is advised that you always use these types of orders otherwise it is easy to forget that you may have something working
• For example today you place a limit sell order to sell £5 of the FTSE 100 at 4300 and it doesn't get filled that day or the next
• On the third day it does get filled but you've now forgot ton about it and therefore didn't want to sell at that price anymore
• There is nothing worse than forgetting to cancel an order only to find it gets filled with the market now moving against you
• If you use good for the day orders and not GTC ones then you'll cut down the possibility of these kinds of occurrences

One Cancels Other Order or OCO

• This is a common order and it consists or two orders where if one is filled, the other order is cancelled
• Assume that you have just bought £1 a point of the Dow Jones Index at 9100 thinking it will rise by at least 50 points
• You place a limit sell order to take profits at 9150
• Obviously there is also the potential for the index to fall, so you decide to place a sell stop loss at 9,070
• You could then work an OCO order against both the limit sell and stop loss order. It would consist of;

Selling £1 of the DJ index at 9150 or
Selling £1 of the DJ index at 9070 on a stop loss
And one Order Cancels Other, hence OCO

So, if your limit sell order at 9150 is filled the broker would automatically cancel the sell stop loss order at 9070. If the DJ went lower and the stop loss was activated then the limit sell order at 9150 is cancelled. It is simple if you think about it.

However is there not a potential problem here, theoretically can't both orders be filled in a very quick and volatile market? Yes, but it depends on how far apart the two orders are.

• If the limit sell order was at 9105 and the sell stop loss was at 9095 then yes both orders could be filled without the broker having time to cancel the other
• However you don't use OCO orders when the two prices are that close together
• To sum up, the two legs of an OCO order should normally be well apart

OCO orders can also be used on short positions. If a spread betting client has just sold short £2 of the FTSE 100 at 4200 he may well place a limit buy order at 4150 OCO a buy stop order at 4230.