What does One Cancels the Other Order (OCO) mean?

OCO is a scenario in which two crypto orders are placed at the same time with the condition that if one is approved, another will be canceled. Similar to limit and stop-loss orders, an OCO order is a sort of conditional order, in which sell or purchase actions are automatically carried out when a trading price threshold is met or surpassed. One order is immediately canceled when the stop or limit price is reached while the other order is fulfilled. Besides, on the majority of the trading platforms, several conditional orders can be placed.

An OCO order enables traders to function efficiently in a dynamic market. They are able to be utilized to define a range that increased earnings while reducing losses. If a trader is attempting to trade Bitcoin (BTC) during a particularly volatile period, they can put two orders, one to sell at an anticipated high price and one to reduce losses if the price falls below a specified threshold. 

For example, if Bitcoin is now priced at $18,000, a user can put a high sell order at $19,000 and a stop-loss order at $17,000 if the market goes in the other way. The same can be said for buy orders.

However, users must acknowledge the fact that OCO orders need skillful implementation, as well as a very good knowledge of the trading techniques and the market overall.

Another example would be if an investor owns 1,000 shares of a volatile stock trading at $10 per share. The investor believes that this stock will fluctuate in a broad range in the near future and has set a price objective of $13. Though they do not wish to lose more than $2 per share in order to manage the risk. Therefore, the investor can execute an OCO order, which would include a stop-loss order to sell 1,000 shares at $8 and a simultaneous limit order to sell 1,000 shares at $13, whichever comes first.

Note that an OCO usually has one stop-loss order and one limit order. Limit orders are utilized to purchase or sell shares of an asset when a particular limit is attained on the market. 

Stop orders are also used to set limitations but in the other way. Their execution can be done in two ways – selling an asset if it begins to fall in order to stop losses, or purchasing an asset if it begins to rise in order to profit from a run.