One Cancels the Other Order (OCO)


What Is One Cancels the Other Order (OCO)?

OTOC is a type of exchange order in which its execution results in the cancellation of the other order, hence, the self-explanatory One Cancels The Other (OTOC) order name. An OTOC is a type of conditional order, similar to limit and stop loss orders, where sell or buy actions are automatically executed when a certain trading price threshold is reached or exceeded.

An OTOC typically contains one stop order and one limit order. As soon as one gets executed for meeting a particular criteria, the other one becomes void. It is a complex trading tool used by professional traders that helps them to either cash in on a soaring price or limit their losses if the market plunges. 

Limit orders are used to buy or sell shares of an asset when a certain limit (a specified price range) is reached on the market. Stop orders, on the other hand, are used to place buy or sell limits as well, but in the opposite direction. Their execution involves selling an asset if the price starts to fall in order to stop losses, or buying an asset if the price starts to rise in order to profit from a run. 

An OTOC order allows traders to operate effectively in a rather volatile market. They can be used to specify a range for maximizing profits and minimizing losses. If a trader is trying to trade Bitcoin (BTC) at a particularly volatile time, they can place two orders to sell at an expected high price or to mitigate losses if the price goes down at a certain point. For instance, if the price of Bitcoin is currently $18,000, a user can place a high sell order at $19,000 and a stop-loss sell order at $17,000 if the market moves in the opposite direction. The same can be done for buy orders as well. 

It should be noted that OTOC orders require skillful execution and a deep understanding of the market and trading methods.


One Cancels the Other Order (OCO)


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