A bracket order pair, commonly called a one-cancels-the-other order, links two orders, typically limit orders, so that the execution of one automatically cancels the other: this is the definition given by the US derivatives regulator, the CFTC, in its official glossary consulted on November 4, 2026 (CFTC). Often referred to by its acronym OCO, this mechanism lets a trader place two competing intentions on the market without having to monitor manually which one becomes obsolete.
The exact definition given by regulators
The CFTC describes the one-cancels-the-other order as follows: “One Cancels the Other (OCO) Order A pair of orders, typically limit orders, whereby if one order is filled, the other order will automatically be cancelled” (CFTC). The CME exchange rulebook uses a close but slightly broader wording, without restricting the mechanism to limit orders alone: “A combination of two orders, in which the execution of either one automatically cancels the other” (CME Group, Rulebook). Both texts agree on a central point: it is execution, not merely a quote or the price reaching a given level, that triggers the cancellation of the paired order.
The official example does not involve a directional position
It is worth noting what the CFTC’s own example actually illustrates, since it differs from the most common use among retail traders. The CFTC uses an example of two buy orders for call options at different strike prices, with the same expiration: “an OCO order might consist of an order to buy 10 calls with a strike price of 50 at a specified price or buy 20 calls with a strike price of 55 (with the same expiration date) at a specified price” (CFTC). In this official example, it is therefore not the classic combination of a protective stop order and a take-profit limit order on a position already open. The general mechanism remains the same, but the scope documented by the CFTC covers two competing opening orders, not necessarily the management of an existing position.
What the reference texts do not specify
Neither the CFTC’s definition nor the CME’s details the mechanism’s behavior in the event of a partial fill on one of the two orders, nor the exact delay between the observed execution and the propagation of the cancellation to the paired order. These two points, though decisive in practice, depend on the implementation chosen by each execution venue or broker, and are not guaranteed uniformly by the one-cancels-the-other mechanism itself. A trader using this feature should therefore check, in their own platform’s documentation, how it handles a partial fill and what processing delay it states, rather than assuming identical behavior everywhere.
Summary table of the definitions cited
| Source | Wording used | Consultation date |
|---|---|---|
| CFTC (official glossary) | Pair of orders, typically limit; execution of one cancels the other | November 4, 2026 |
| CME Group (rulebook, definitions) | Combination of two orders; execution of either one automatically cancels the other | November 4, 2026 |
Why this mechanism matters for a trader on a funded account
For a trader managing a position while respecting a loss threshold, the point of a bracket order pair is to avoid leaving two active orders at once once one of them has done its job. This connects to concerns already covered for other order types at WeGetFunded, for example how the stop-limit order works, which protects the execution price but may never trigger, or how the trailing stop loss works, whose threshold follows the market without guaranteeing execution at the intended level. As with these mechanisms, caution calls for checking the platform’s documentation before relying on an assumed behavior.
Frequently asked questions
What is a bracket order pair?
It is a pair of orders, typically limit orders, in which the execution of one automatically cancels the other, according to the CFTC’s definition. The CME uses a similar wording, without restricting the mechanism to limit orders alone.
Does a bracket order pair only serve to protect an open position?
No. The CFTC’s official example involves two buy orders for options at different strike prices, meaning two competing opening orders, not necessarily the management of an already existing position.
What happens if one of the two orders is only partially filled?
Neither the CFTC nor the CME specifies this behavior in their definitions. It depends on the implementation specific to each execution platform, which makes it necessary to check directly with the broker or platform used.
Is the cancellation of the paired order instant?
The reference texts consulted give no propagation delay. This technical point is not guaranteed uniformly by the one-cancels-the-other mechanism itself and varies by platform.