What Is OCO (One-Cancels-the-Other) And How To Use OCO Order Type
A pair of conditional orders known as one-cancels-the-other (OCO) orders stipulate that if one order executes, the other is immediately cancelled. On an automated trading platform, an OCO order combines a stop order and a limit order.
The other order is automatically cancelled when the stop or limit price is reached and the order is executed. OCO orders are used by experienced traders to reduce risk and enter the market. Order-sends-order (OSO) conditions, on the other hand, may activate rather than cancel a second order.
What Is an OCO Order?
An OCO, or “One Cancels the Other” order, allows you to place two orders simultaneously. It combines a limit order and a stop-limit order, but only one of them can be implemented simultaneously. Put another way, as soon as one of the orders is half or satisfied, the other is automatically cancelled. It’s worth noting that cancelling one order will also cancel the other.
You can use OCO orders as basic trade automation when trading on the Binance Exchange. This feature allows you to place two limit orders simultaneously, which can be useful for taking profits and limiting potential losses.
How to use OCO orders?
Log into your Binance account and navigate to the Basic Exchange interface to begin trading. Select “OCO” from the drop-down menu by clicking on “Stop-limit order.”
To place an OCO order on Binance, you must enter two separate orders. To learn more about OCO orders, click the question mark.
A new trading interface will be loaded after selecting the OCO option, as seen below. You can use this interface to specify a limit and a stop-limit order at the same time.
Limit Order Price: The cost of your limit order. On the order book, this order will be visible.
The price at which your stop-limit order will be triggered is called the stop (e.g., 0.0024950 BTC).
After the stop is triggered, the actual price of your limit order is called the limit (e.g., 0.0024900 BTC).
Amount: The total amount of your order (e.g., 5 BNB).
Total: The total amount of money you’ve spent on your order.
After placing your OCO order, scroll down to the “Open Orders” section to see the specifics of both orders.
As an example, assume you recently purchased 5 BNB at 0.0026837 BTC because you believe the price is near a major support zone and would likely rise.
You can utilize the OCO tool to put a profit-taking order at 0.0030 BTC and a stop-limit order at 0.0024900 BTC in this scenario.
Your sell order will be executed if your prediction is right, and the stop-limit order will be immediately cancelled if the price increases to or above 0.0030 BTC.
However, if you are incorrect and the price drops to 0.0024950 BTC, your stop-limit order will be triggered. This could help you limit your losses if the market declines much further.
The Stop Price is 0.0024950 (trigger price) and the Limit Price is 0.0024900 in this case (the trading price of your order). This means that when the 0.0024950 mark is achieved, your stop-limit order will be triggered. Your order’s real trading price, however, would be 0.0024900. In other words, if BNB/BTC falls to or below 0.0024950, a limit sell order will be issued at 0.0024900.
The OCO feature is a simple but effective mechanism that allows you and other Binance users to trade with greater security and flexibility. This particular sort of order can be used to lock in profits, minimize risks, and even enter and exit positions. Before employing OCO orders, you need have a thorough understanding of limit and stop-limit orders.