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Matrix – Placing OCO and OSO Orders
OCO is an acronym for Order Cancels Order and OSO is an acronym for Order Sends Order.
These are types of conditional orders that are linked together. In an OCO, if one of
the orders is filled, then all of the other parallel orders are cancelled. In an OSO,
when a primary order is filled it sends one or more secondary orders. To place an OCO
order, use the Place OCO order button in the Trade bar. To place an OSO order, use the
Attach OSO checkbox in the Trade bar. The OCO and OSO functionality provides a dropdown
with multiple templates to choose from. Let’s discuss some of these templates in more detail.
OCO Templates – Entry Breakout and Fade
There are four OCO templates that will enter long or short positions depending on the direction
of the market. Let’s describe the first scenario: suppose that the market has been
trading within a range and you feel that it will make a significant move up or down, but
you are not sure in which direction. The Entry Breakout template will monitor both sides
of the market; it will send a Buy Stop order above the current market and a Sell Stop order
below the current market. Whichever order is hit first will open a position in that
direction and the other order will be cancelled.
In our second scenario the market is still trading within a specific range. But, you
believe that once the market reaches the upper limit of the trading range it will retrace
back down, and if it reaches the lower limit of the range then it will move back up. The
Entry Fade template will monitor the upper and the lower limit of the range and send
a Buy limit order below the current market and a Sell Limit order above the current market.
If the upper limit of the trading range is hit, a Short position is opened and the buy
order is cancelled. If the lower limit of the trading range is hit, a Long position
is opened and the Sell order is cancelled.
Let’s describe a third scenario: suppose you are bullish and you want to establish
a long position. But you are not sure if the market will breakout resistance first or retrace
to a lower support level and then move up. The Entry B/F Buy template, where B/F stands
for breakout fade, will monitor these two price levels for you. It will send a buy stop
order above the current market and a buy limit order below the current market. Both orders
will monitor different price levels and establish long positions if filled; once one of the
orders is filled the other is cancelled.
Now, let’s describe a fourth scenario: suppose you are bearish and you want to establish
a short position. The market has been trading within a price range and you are not sure
if it will breakout support first, or move up to a resistance level and then retrace
back down. To monitor both price levels you may use the Entry B/F sell template. This
OCO will send a Sell Stop order below the current market and a Sell Limit order above
the current market. If one order gets filled the other gets cancelled; but they are both
ready to establish short positions.
Placing an Entry Breakout OCO
For demonstration, let’s place an OCO order that will monitor support and resistance levels
for MSFT and will enter a position as soon as there is a breakout. Keep in mind that
this functionality can be used for all asset classes and the steps described in this demonstration
are also applicable. I click the dropdown under the Place OCO Order button and select
the Entry Breakout template. I click the ellipsis button on the right to format the template.
Some of the fields here are customizable and others are fixed depending on the type of
template. In the first two columns you see the type of orders and the action they take;
we Buy Stop above the market and Short Stop below the market. The Quantity is set as a
percentage of the quantity specified in the Trade Bar. 100% will trade the whole quantity.
You may adjust the percentages if you have a bias on either one of the positions. You
may trade 100% of the quantity if it breaks resistance but maybe only trade 50% if it
breaks support. I’ll leave this at 100%. The Price Offset column will determine how
far away from the current trading price will the orders be set. The default value is 0.10;
which means that my Buy Stop will be set 10 cents above the current trading price and
my Short Stop will be set at 10 cents below the current trading price.
Please note that for Futures and Forex traders, the price offset is entered using minimum
price increments. The default setting for futures is 10 minimum price increments; so
if you are trading the S&P Emini Futures which trades in quarters of a point, a price offset
of 10 would represent 2 and one half points. The default setting for Forex is 100 minimum
price increments. In TradeStation Forex pairs are quoted using fractional pips or one tenth
of a pip; so a price offset of 100 would be the equivalent to 10 full pips.
You may use the directional arrows to increase or decrease the price offset. Let’s modify
the price offset by typing a new amount. I click inside the cell and type 0.05 for both
orders. When placed, my orders will be 5 cents away from the current trading price. Notice
that you also have access to modifying Duration and Route for these two orders. If you would
like to access advanced order features click the ellipsis button under the Advanced column.
Here you will find advanced order settings such as activation rules and trailing stops.
When finished formatting, click OK. To place the OCO order, click the Place OCO Order button.
In the Orders column the two active orders are displayed. One will buy 500 shares at
5 cents above the current trading price and the other will sell short 500 shares at 5
cents below the current trading price. If one is filled the other is automatically cancelled.
OCO Templates – Exit Brackets
There are 12 different OCO exit brackets that allow you to exit your position with one or
more profit target exits and one or more stop loss exits. The dropdown under the Place OCO
Order button abbreviates the name of these templates: Brk stands for Bracket, L stands
for Limit, S stands for Stop, and SL stands for Stop Limit. The differences between these
templates are the number of targets and stops that will make up your OCO, and the type of
Stop they use, Stop Market or Stop Limit. Using these built-in templates you can place
up to three different profit targets and two different stop loss levels.
Placing an OCO with 2 Profit Targets and 1 Stop Loss
In this example, we are going to set an Exit Bracket with 2 profit targets and 1 Stop loss.
Notice that I am long 500 shares of MSFT. I Click the dropdown under the Place OCO Order
button and select Exit Brk 2L/1S. Then I click the ellipses button to the right of the dropdown
to format the OCO. Here you can see the type of orders being sent. The action is opposite
of position: this means it will place sell orders if you hold a long position and it
will place buy to cover orders if you hold a short position.
The OCO is separated into two brackets. One bracket will monitor the first target and
the other will monitor the second target. The quantity is automatically set to 50% per
bracket. This can be adjusted if you wish to exit your position differently. Let’s
click inside the Quantity cell and adjust the quantity for the first target to 40%;
this way it will exit 200 shares of my 500 share position. Then I adjust the quantity
for the second bracket to 60% to include all remaining shares.
The price offset determines how far away from the current trading price these orders will
be set. By default, the first profit target is set to 10 cents above the current trading
price and the second target is set 20 cents above the current trading price. I click inside
the cells to change these amount; the price offset for my first target is 5 cents and
the price offset for my second target is 10 cents.
In this template the stop has been split into the two brackets. However, notice how the
two stops have the same price offset of 10 cents, this way, if the stop price is hit
it is filled as one stop for the entire position. The targets and the stops are grouped in this
manner so that if the first target is filled, it will automatically reduce the quantity
for the stop by 40%. It will remain active for the remaining 300 shares. I will click
inside the cell for both brackets and change the price offset to 5 cents.
Remember, if you are a Futures or a Forex trader, the price offset is entered using
minimum price increments. The default setting for futures is 10 minimum price increments;
so if you are trading the S&P Emini Futures which trades in quarters of a point, a price
offset of 10 would represent 2 and one half points. The default setting for Forex is 100
minimum price increments. In TradeStation Forex pairs are quoted using fractional pips
or one tenth of a pip; so a price offset of 100 would be the equivalent to 10 full pips.
Notice that you also have access to modifying the Duration and Route for these two orders.
If you would like to access advanced order features click the ellipsis button under the
Advanced column. Here you will find advanced order settings such as activation rules and
trailing stops.
When finished formatting, click OK. To place the OCO order, click the Place OCO Order button.
In the Orders column the three active orders are displayed. The first target will sell
200 shares at 5 cents above the current trading price and the second target will sell 300
shares at 10 cents above the current trading price. If the first target is filled, the
quantity for the stop will be automatically adjusted for the remaining shares. If the
second target is filled, the remaining stop is cancelled. However, if the Stop is hit
first, the two profit targets are automatically cancelled.
OSO Templates – Attaching Exits
The Attach OSO functionality available in the Trade bar, allows you place exit orders
simultaneously with your entry orders. If the primary entry order is filled, the secondary
exit orders are automatically sent; hence the name Order Sends Order. For example, if
you place an order to buy MSFT you could have profit targets and stop loss orders automatically
attached to it. This way, if your order to buy MSFT is filled you automatically have
your profit targets and stop loss orders in place. All the OCO Exit Bracket templates
are available when clicking the dropdown under Attach OSO. This means that, when using these
templates, you may attach up to three profit targets and two stop loss orders to each entry.
In addition to the OCO Exit brackets, there are two additional templates available: Exit
– Stop Limit Only and Exit – Stop Only. Let’s use one of these templates to simultaneously
place a trailing stop when buying or selling short.
Placing a Buy order with an Attached Trailing Stop
To attach a trailing stop to an entry order placed in the Matrix, first make sure the
Attach OSO checkbox is checked. Then click the dropdown under Attach OSO and select the
Exit – Stop Only template. Click the ellipsis button to the right of the dropdown to format
the stop order. The Type of order is stop market. The action is opposite of primary
which means it will attach a sell order if you place an order to buy and it will attach
a buy to cover order if you place an order to sell short. The percentage under quantity
is the amount of shares or contracts that will be exited if the stop is triggered. In
this case, I want to exit the whole position so I’ll leave this setting at 100%. The
price offset will determine how far away from my entry price will my stop be set. But instead
of setting a fixed stop price, I want the stop to trail and automatically adjust the
stop price as the current market activity moves in my favor. To set a trailing stop
I will click the ellipsis button under Advanced. In the Advanced setting dialog, check the
box for Trailing Stop. Select the way the trail amount is to be calculated. We’ll
use points for this example so I’ll enter 0.10 in the amount field. The stop should
stay 10 cents away from the current trading price. Click OK. Double check under advanced
to verify the trailing stop and the amount. Notice that even though we entered the trail
amount in points as 0.10, under advanced the trail amount is displayed in minimum price
increments as 10.
Keep this in mind when trading Futures or Forex. The stop trail amount is entered using
points, but when you click OK in the Advanced Settings dialog, this value is converted to
minimum price increments and is displayed this way under the advanced column. For example,
if you are trading a currency pair such as EURUSD and you enter a stop trail amount of
0.0010, you will see the trail amount converted to minimum price increments and displayed
as 100 under the advanced column. Click OK.
At this point, any order you place in the Matrix will automatically have a trailing
stop attached to it. Let’s place a market order to demonstrate this functionality. I
click the Buy Market button in the Trade bar to open a long position. Notice how a trailing
stop will automatically be sent and displayed under the Orders column. The order details
included in the cell will display the trail amount.
Placing an Entry Breakout OCO with Attached Targets and Stops
Earlier in this presentation we talked about an Entry Breakout OCO. A symbol may be trading
within a specific range. You expect the price to make a significant move but you are not
sure in which direction. This OCO places a Buy order at the upper limit of the trading
range and a Sell order at the lower limit of the trading range. It enters a long position
if it breaks the upper level or a Short position if it breaks the lower level. When one of
the orders is filled, the other order is cancelled.
In this example, we’ll demonstrate how to attach profit targets and stop losses to this
entry OCO. First, click the dropdown below the Place OCO Order button and select Entry
Breakout. Click the ellipsis button to the right of the dropdown to specify the distance
of my entry orders in relation to the current trading price. I will set my Buy order 10
cents above and my Sell order 10 cents below. Click OK. Next, put a check mark in the Attach
OSO checkbox. Click the dropdown below the Attach OSO checkbox, and select Exit – Bracket
– 1L 1S which stands for 1 Limit, 1 Stop. Click the ellipsis button to the right of
the dropdown to set your price offsets. The Limit order which is my profit target will
be set at 5 cents, and the Stop Market order which is my stop loss, will also be set to
5 cents. The 5 cent price offset for the target and the stop is calculated from the entry
price of the primary order once it is filled. I’m choosing very tight brackets so that
we are able to see the complete setup in the Matrix. To place this order I click the Place
OCO Order button in the trade bar.
Notice that with one click of the mouse I was able to send six different orders simultaneously.
The orders that appear in gray are my primary entry orders; they are monitoring the breakout.
The orders that appear in green are queued and they will become active once the primary
order is filled. If my Buy order is filled, it will cancel not only the Sell Short order
but also the bracket that is attached to it. The same would happen if my Sell Short order
is filled, the Buy order and its bracket would be cancelled. Notice what happens if I click
and drag the Buy order to change the price. The whole bracket is moved with it. The prices
for the bracket orders may also be adjusted individually by clicking and dragging. Cancelling
any of the primary orders will also cancel the exit bracket.
Keep in mind that as long as the checkbox for Attach OSO is checked, the exit bracket
that appears in the dropdown menu will be attached to any order that is placed in the
Matrix. If you wish to enter a single order, remember to uncheck this box.
All this functionality is also available when using the TradeStation Simulated accounts.
When placing a trade using a simulated account, you are simulating a trade and you are not
risking any real money. All simulated accounts are preceded with the letters “SIM” to
indicate that you are in the simulated environment.
Thank you Thank you for completing this tutorial.
Remember that the TradeStation Platform Help is a resource available to you from the TradeStation
Help menu should you have any questions about using the platform.