OCO Order and and How to Place Buy and Sell OCO orders

OCO trade is a one of the most powerful features and tool that has been implemented by a lot of the top exchanges to help traders make profits and also manage risk and reduce losses using on tool. OCO simply means One Cancel the Other which is simply a combination of both the limit order and the stop-limit order with instructions that tells the exchange how to execute a trade when the prices reach a certain point and cancel the other. In OCO, only one order is executed and the other order is cancelled. When a trader uses OCO order for a LTC sell order, the trader can set the instruction that tells the exchange to sell LTC when the price rises to a certain point so as to take profit, however, sell LTC when the price falls to a certain point for stop loss which cancels the other order.

OCO Order – Buy order

To place an OCO buy order trade on the binance exchange, go to the exchange. Using the classic exchange interface, search for your specific asset and choose your preferred trading pair. I chose LTC/USDT for this. Scroll down to find the buy and sell sections. We will be buying, so on the buy section, click on stop limit dropdown arrow to bring up the other element. Select OCO. In the BUY LTC input section, for the price in USDT (which is the price that I want to buy LTC) I typed in 165, for the stop price in USDT (which is the price that will trigger the limit buy price) I typed in 180, for the limit price in USDT, I typed in 180.05 and for the amount I typed in 5 (which is the amount of LTC I want to buy).

The interpretation means that, I want to buy LTC at a lower price when the price of LTC drops lower than current market price. However, there is a possibility that the price will not drop and continue increasing. So in other not to miss out on the opportunity, I can set to buy at a higher price than the current market price because when the price increase more, there is a possibility that it will keep increasing further. As a trader, I want to buy low and sell high. But sometimes you can buy high and sell higher. That is the main benefit of using OCO to buy. For me, I want to buy LTC at 165 USDT when the price of LTC falls to 165 USDT. But if the price doesn’t fall and keeps increasing to 180 USDT, it means that it would most likely continue to increase and go above 195 USDT. So if the price doesn’t fall to 165, but rises to 180, I want to buy the 5 LTC at 180.05 USDT. With this, I can still make profit because for the price to reach 180, it would most likely continue to rise and reach above 190 USDT and I can now take profit.

OCO Order – Sell order

In the SELL LTC input section, for the price in USDT (which is the price that I want to sell LTC) I typed in 190, for the stop price in USDT (which is the price that will trigger the limit buy price) I typed in 165.05, for the limit price in USDT, I typed in 165 and for the amount I typed in 5 (which is the amount of LTC I want to buy).

The interpretation means that, I want to sell LTC at a higher price when the price of LTC rises above the current market price. However, there is a possibility that the price will not rise and start dumping. So in other to reduce my losses, I can set to sell at a lower price than I bought because when the price decrease more, there is a possibility that it will keep decreasing further. As a trader, I want to buy low and sell high. But sometimes you can buy low and the price will still go lower. That is the main benefit of using OCO. For me, I want to sell LTC at 190 USDT when the price of LTC increases to 190 USDT. But if the price doesn’t increase and keeps decreasing to 165.05 USDT, it means that it would most likely continue to decrease, so I will have to sell at a small loss. So if the price doesn’t increase to 190, but dumps to 165.05, I want to sell the 5 LTC at 165 USDT. With this, I can still reduce my losses because for the price to dump to 165.05, it would most likely continue to dump which can lead to more losses.