One Cancels the Other Order (OCO)

One Cancels the Other Order (OCO) is a type of order used in cryptocurrency trading where two orders are simultaneously placed, but if one order is executed, the other order is automatically canceled. This allows traders to set both a stop-loss order and a take-profit order simultaneously, mitigating potential losses and locking in profits.

Example:

Let's say a trader buys Bitcoin at $50,000 per coin. They want to minimize their potential losses and secure profits. They place an OCO order with the following parameters:

1. Stop-loss order: Sell Bitcoin if the price drops to $45,000.
2. Take-profit order: Sell Bitcoin if the price rises to $55,000.

Scenario 1:

If the price of Bitcoin drops to $45,000, the stop-loss order is triggered, and the OCO order automatically sells the Bitcoin to prevent further losses.

Scenario 2:

If the price of Bitcoin rises to $55,000, the take-profit order is triggered, and the OCO order automatically sells the Bitcoin to secure profits.

In either scenario, once one of the conditions is met, the other order is automatically canceled, preventing conflicting actions.