What is an OCO order?

If you want to succeed in trading crypto or other assets, you should be aware of some secrets that make trading safer and easier. For instance, you have probably heard of OCO orders. It is a user-friendly and effective tool for hedging profits, controlling risks, and minimizing potential losses.

How does it work?

A one-cancels-the-other (OCO) order unites Limit and Stop Limit orders, which are interconnected by the function of mutual exchange. Both orders should be either buy or sell orders. Thus, as soon as one of these orders is partially or completely executed, the system automatically deletes the other one.

What is the OCO order used for?

Experienced traders use OCO orders in their trading strategies quite often as this tool has many benefits:

– it enables you to place two trades at the same time, which makes the transaction faster

– it gives investors the opportunity to take advantage of short-term market movements

– it makes hedging in the options market rather effective

– it is the best tool for those who do not want to monitor price changes on a daily basis, preferring to buy or sell under certain conditions

Example of how to use OCO orders

For instance, a speculator is the lucky owner of 1 BTC, which is trading at $19,415 today. He is sure that the digital asset is undervalued. He expects the price to grow by another $100 in the near future. To make sure that he has locked in a profit, the trader places a Sell Limit order at $19,515. Apart from this, he sets a Trailing Stop order for $100, which will be executed if the price drops by $100 from the current high. When BTC rises to $19,515, a Limit Sell order will be activated and the Trailing Stop order will be automatically canceled.