How Do Stop Loss and Take Profit Work Together (OCO)?

When you set Take Profit and Stop Loss together on a US Stock buy order, they run as a linked pair under the One Cancels the Other rule. Both become active automatically once the buy order is executed, and the Exit Strategy can be used across order types for stocks with a minimum purchase of 0.1 shares. From then on, whichever level the market reaches first is the one that executes, and the other is cancelled automatically the moment it does. The link runs both ways, so cancelling one side manually also cancels the other. If the price falls from your purchase price to the Stop Loss level, Stop Loss executes and Take Profit is cancelled; if it rises to the Take Profit level instead, Take Profit executes and Stop Loss is cancelled. The pair runs for a maximum of 30 calendar days.

• Activation: both sides go live automatically once the buy order executes, with a minimum purchase of 0.1 shares
• First one wins: whichever level the market reaches first executes, and the other cancels automatically at that moment
• The link runs both ways: cancelling one side manually also cancels the other side
• Downside path: the price falls to your Stop Loss level, Stop Loss executes, and Take Profit is cancelled
• Upside path: the price rises to your Take Profit level, Take Profit executes, and Stop Loss is cancelled
• Neither path: if neither level is reached within the 30-calendar-day window, both orders are cancelled automatically
• Where to set it: you can add Take Profit or Stop Loss when placing a buy order, or add and change them on a buy order already created

Related questions:

Q: Can you walk through a worked example?
Take a purchase of 1 AMZN share at $100 with Take Profit set at $120 and Stop Loss at $90. If the price rises to $120, the Take Profit executes, the share sells at $120 for a $20 gain, and the Stop Loss is cancelled automatically. If instead the price falls to $90, the Stop Loss executes at $90 to limit the loss and the Take Profit is cancelled.

Q: What if neither level is reached?
Nothing executes and both orders are cancelled together at the end of the 30-calendar-day window. Using the same AMZN example, a purchase made on 24 October with levels at $120 and $90 would see both orders cancelled around 23 November if the price never touched either figure. Your shares stay in the portfolio and you can set a fresh Exit Strategy afterwards.

Q: If I cancel one side, does the other survive?
No. The link is symmetrical, so cancelling one order cancels the other as well. There is no way to keep just the Stop Loss running after cancelling the Take Profit, or the other way round. If you want only one of the two levels active, you would cancel the pair and set up a new Exit Strategy with only the side you actually want.

Q: Is there a minimum position size for OCO to work?
Yes, a minimum purchase of 0.1 shares. The Exit Strategy can be used across order types for stocks that meet that threshold, so a very small fractional position below 0.1 shares will not support an attached Take Profit or Stop Loss. Check the quantity on your buy order first if the Exit Strategy option is not behaving the way you expect.