It is an instruction given when enlisting pair of unconditional orders at the same time if one is executed, the other is annulled mechanically. The one cancels another order is frequently chains a stop order with a limit order on a robotic trading platform. When either stop order or limit order is gotten and completed, the other order robotically get cancelled.
Usually, professional forex traders use one cancels other order to mitigate market risk. The one cancels traders typically use different order for unpredictable stocks that trade in the wide price range.
Traders use one cancels other order to get benefits from trade breakouts and retracements. If trader desired to trade a breakout below support or above resistance, they could place a one cancels other order that uses a sell stop and buy stop to enter the market.
For example, if the commodity is trading in a range between $50 and $80, a trader wanted to use a breakout strategy, they could place a buy stop order above $80 and sell stop order below $50. Once the price break above or below resistance and support levels, a trade is executed and correspondent order is cancelled automatically.
Similarly, if the trader wanted to use retracement strategy, they could place buy limit order $50 and sell limit order at $80. Once the trade is executed, the trader is required to manually set a stop-loss order to minimize the loss in case of any change against your trade.