What is the "Order Cancels Other" (OCO)?
A comprehensive guide to understand the smart trading tool
In the trading world, whether in traditional markets or cryptocurrencies, traders rely on smart tools that help them manage risk and maximize market movements. Among these important tools is the "Order Cancels Other" or what is known in English as OCO - One Cancels the Other Order.
So what is this type of order? And how can it be effectively used in trading strategies?
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✅ Definition of Order Cancels Other (OCO)
The Order Cancels Other is a trading order that consists of two conditional orders: if one is executed, the other is automatically canceled.
This type of order is used when a trader wants to cover two different scenarios in the market without the need for constant monitoring.
🔁 Practical example:
Imagine you own a cryptocurrency currently trading at $100. You want:
Sell it if the price rises to $120 (Take Profit).
Or sell it if the price drops to $90 (Stop Loss).
Instead of entering two separate orders that may overlap, you use an OCO order that links the two orders together: if one condition is met, the other is automatically canceled.
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💡 Components of an OCO Order
An OCO order typically consists of:
1. Stop Order
It is activated when the price moves against you to protect you from large losses.
2. Limit Order
It is activated when the price moves in your favor, and you want to take profit at a specific level.
Once one of the orders is executed, the other is automatically canceled, preventing double execution that may confuse capital management.
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📊 Why do traders use OCO orders?
1. Automatically managing risk
Provides automatic protection from losses and realizing profits without continuous market monitoring.
2. Reducing psychological stress
The trader knows that in both cases (profit or loss) there will be a plan ready to execute.
3. Interacting with high volatility
In volatile markets, prices may move very quickly, and having an OCO order ensures immediate benefit or protection.
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📌 Where can OCO orders be used?
In professional trading platforms like Binance, Kraken, and Coinbase Pro.
In stock and forex trading through platforms like MetaTrader or ThinkorSwim.
It is widely used by short- and medium-term traders.
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⚠️ Important notes when using OCO
Make sure to accurately set stop loss and take profit levels.
If liquidity is low in the market, the order may not be executed at the specified price.
Some platforms do not support OCO orders, or impose specific conditions for their use.
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🧠 Tips for beginners
If you are a beginner, using OCO orders can be a smart step to reduce stress and improve your decisions.
Start with small amounts, and practice setting these orders in a demo environment if possible, before using real money.
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✍️ Summary
The Order Cancels Other (OCO) is a powerful tool that helps the trader automatically and effectively handle two potential scenarios in the market.
Whether you are looking to protect your capital or safely take your profits, these orders give you greater control and peace of mind in trading.