OTO Orders: One Triggers Other

OTO orders let you chain multiple orders together so that one order automatically activates another. This powerful conditional logic enables complex trading strategies that execute automatically based on market action, without requiring you to monitor screens constantly.

What is an OTO Order?

OTO stands for One Triggers Other. It creates a parent-child relationship between orders. The parent order is your primary order that you want to execute first. The child order remains dormant until the parent order fills. Once the parent executes, the child order automatically activates and goes to market.

How OTO Orders Work

Here is the OTO order sequence:

• You create a parent order (your entry or first action)
• You attach a child order that stays inactive
• The parent order goes live in the market
• When the parent fills, the child order automatically activates
• The child order executes based on its own conditions

Why Use OTO Orders?

1. Automate Entry-to-Protection

The moment you enter a position, your protection is in place. No gap between getting filled and setting your stop. This is crucial for fast-moving markets where prices can move against you in seconds.

2. Trade While Away

Set up your entire trade sequence before the market opens or before you leave your desk. OTO orders execute your plan even when you are not watching.

3. Eliminate Forgotten Stops

Traders often enter positions and forget to set stops. OTO orders make protection automatic. Your stop is part of the entry itself.

4. Enable Complex Strategies

Chain multiple orders for sophisticated trading strategies. Entry triggers exit orders, exit orders could trigger new entries. The possibilities expand significantly.

Common OTO Applications

Entry with Stop Loss

The most fundamental use. Your entry order triggers an immediate stop loss. This ensures every position has protection from the moment it opens.

Breakout Entry with Protection

Wait for a breakout to occur, then have your stops ready immediately. Perfect for trading range breakouts or momentum moves.

Entry Triggers OCO Exits

Combine OTO with OCO for complete trade automation. Your entry triggers both a profit target and stop loss as an OCO pair. This is essentially a bracket order built from OTO and OCO components.

OTO vs OCO: Understanding the Difference

These order types serve different purposes:

• OTO (One Triggers Other): Sequential. One order activates another. Used to chain orders together.
• OCO (One Cancels Other): Simultaneous. Two orders compete; one cancels the other. Used for alternative exits.

OTO and OCO often work together. OTO handles the sequential logic (entry triggers exits), while OCO handles the competing exits (profit target vs stop loss).

Advanced OTO Strategies

Scale-In OTO Chain

Use OTO to build a position in stages. First entry triggers a second entry order at a lower price for averaging down, with stops attached to each.

Trailing Trigger

Your entry triggers a trailing stop instead of a fixed stop. This locks in profits as the trade moves in your favor while still providing downside protection.

Time-Delayed Triggers

Some platforms allow time conditions. Entry triggers an exit order that activates only after a certain time period, useful for letting trades work before applying tight stops.

OTO Order Limitations

Partial Fills

If your parent order partially fills, behavior varies by broker. Some activate the child order proportionally, others wait for complete fills. Understand your broker's policy.

Trigger Timing

Child orders activate after parent fills, not instantly. In fast markets, there may be a brief gap. Your stop might activate at slightly different prices than expected.

Order Cancellation

If you cancel the parent order before it fills, the child order should cancel automatically. If the parent fills then you cancel the child, you have an unprotected position.

Complexity Limits

Most brokers limit how many orders you can chain together. Complex multi-level OTO structures may not be supported.

Common OTO Mistakes

1. Wrong Child Order Direction

If you buy shares, your child stop should be a sell. Accidentally setting it as another buy doubles your position instead of protecting it.

2. Mismatched Quantities

Parent buys 100 shares, child sells 50. You are left with 50 unprotected shares. Always match quantities unless intentionally scaling out.

3. Assuming Instant Activation

Child orders need processing time after parent fills. In extremely fast markets, this gap matters. Do not assume zero delay.

4. Forgetting Order Duration

If your parent is a day order and does not fill, both orders cancel at market close. Use GTC (Good Till Canceled) if you want orders to persist across sessions.

OTO Order Availability

Most major brokers support OTO orders:

• May be called "conditional orders" or "triggered orders"
• Often found in advanced order entry screens
• Mobile apps may have limited OTO functionality
• Paper trading accounts usually support OTO for practice

Summary

OTO orders chain your trades together through conditional logic. When your first order fills, subsequent orders automatically activate. This automation ensures protection is immediate, eliminates the need for constant monitoring, and enables complex multi-step strategies.

Use OTO orders to connect your entries with your exits. Every position should have protection from the moment it opens, and OTO makes this automatic. Combined with OCO for competing exits, you have the foundation for fully automated trade management.

Continue learning about conditional orders with our guides on advanced conditional orders and bracket orders.