Have you done crypto trading before? If yes, then you must know very well that it’s not that easy to define where the market will move in the next hour of the day? Sometimes, it seems the chance of bullish and bearish trends will be the same.
So, what should a trader do in this case? Will he leave watching the trend and stay without doing anything? Is it the right option? Of course, not! So, what is the best option here? Enter OCO (One-Cancels-the-Other) order. Yes! If you want better control of your profit and loss targets, consider OCO order. This is a conditional order that will help traders automate their exit strategies and help mitigate risks. What is an OCO order? An OCO order is a pair of orders wherein the execution of one order cancels the other order. If one of the orders fills, the other one will be canceled automatically. In this order type, a set of two instructions is given to the bot to fill orders. Usually, it combines a limit order, with a stop-limit order, but only one of the two orders will be executed. As soon as one of the orders gets fully or partially filled, the left one will be canceled. Let’s understand this order type with an example: Suppose a trader buys any crypto asset trading at $40. He sets a profit target at $30 and doesn’t want to lose more than 10% value in this position. Here he can place an OCO order consisting of a limit sell order at $52, and a sell stop at $36. If the price of the crypto asset reaches $52, the trader’s position will close out at a profit and the stop sell order will get cancelled automatically. How OCO orders work and why should you use them? The expert traders use this order type to enter either long or short. And, when the market makes its move, the trader can earn a profit, one way or the other. Limit orders are used to buy and sell crypto assets when a certain limit is reached on the market. On the other side, stop orders are used to buy or sell limits in the opposite direction. The execution of a stop order in an OCO order involves selling a crypto asset if the price starts to fall in order to stop the losses, or buying a crypto asset if the price starts rising. This order type allows its traders to operate effectively rather than in the volatile crypto market. The trader can specify ranges for minimizing losses and maximizing profits. For example: If Bitcoin is trading at $50,000, the trader will use a stop order to buy at a price above the current market, and a stop order to sell would be placed below the market price. Additionally, the trader would place a limit order like Trailing Limit sell order to sell an asset above the current market price, while a Trailing limit buy order is placed below the market price. And, grouping of these order types is conditional as one cannot execute these at the same time. One of these orders will get canceled and other one will be executed. Why do expert traders use OCO order? Most expert traders who know about OCO order trend usually rely on it for a variety of reasons. Some of these include: • OCO order makes it easier for a trader to manage risks • It makes the trading emotionless When to use OCO order? The best crypto trading terminal like TrailingCrypto allows traders to use OCO orders to manage their risks in different scenarios. A trader must have a thorough understanding of this order type before placing the order. Let’s understand how? Managing risks in open positions Let’s say the trader is longing for Bitcoin currently and he wants to manage risks so that if the market moves against him, he can exit the trade without much loss. On the other side, if the market moves in your favor strongly, then he will exit the trade with a profit. Suppose, a trader has entered the market near $57,000, and the previous week’s low was at $51,000. Then according to analysis, a correction back below would negate the momentum behind the current uptrend. And, if the Bitcoin is resting near $64,000 and the trader believes that BTC may find resistance and trade lower if it approaches to the previous all-time high. In such a scenario, an expert trader will place a sell order at $51,000 and a sell-limit order at $64,000. And, at the moment when one of the orders is filled, the other order needs to be canceled automatically. Therefore, the trader joins these orders together as an OCO order. Trading when breakouts occur Another common scenario for implementing OCO orders by expert traders is when the market is trading within a defined range. However, if he is unsure about the direction of the next trend, they can place a sell stop order below support, and a buy a stop order above resistance. Deciding between buying two different cryptocurrencies There are times when a trader is interested in investing in two different cryptocurrencies, but he has limited funds. In this scenario, an OCO order can be utilized on each cryptocurrency so that when a buy limit is reached for one of them, the other will be canceled. For example, you are interested in buying two cryptos X and Y, but don’t have enough funds to invest in both. They can set an entry order to buy X at 61% Fibonacci retracement level, or can set another entry order at the same $61% Fibonacci retracement. He can wrap the two orders together as an OCO. So, the moment any of these two order triggers, the second entry will be canceled automatically. The technique of using OCO order is especially beneficial when dealing in leveraged products so that the trader isn’t overleveraged in their funds. Placing an OCO order at TrailingCrypto How to place OCO orders at TrailingCrypto: • Select OCO order type. • Select Base and Quote crypto coin. o g. Market: X/Y • Select the number of coins that need to be sold. o E.g. 100 coins (quantity could be in the fraction) • Fill the Stop Loss fields. Refer Stop Loss. • Fill the Take Profit fields. Refer Take Profit. TrailingCrypto is one of the best crypto trading terminal that allow traders to place OCO orders using the Telegram signal trading bot. Using signals allows traders to place trades based on messages on their telegram account. TrailingCrypto signal trading bot keeps eye on the popular signals and places trades accordingly.