One-Cancels-The-Other Order

A one-cancels-the-other (OCO) order is a set of orders placed with the condition that if one is triggered or executed, the other is canceled.

What Is a One-Cancels-the-Other Order in Crypto?

A one-cancels-the-other (OCO) order is a trading order that allows traders to place two different orders simultaneously for the same digital asset. It stipulates that if one of the two orders is fulfilled, the other is automatically canceled. 

To put it differently, OCO is a pair of conditional orders, where a buy or sell action is automatically fulfilled when a certain price threshold is met. And the execution of one order results in the cancellation of the other. What’s more, manually canceling one of the orders automatically cancels the other order. 

How Do OCO Orders Work?

An OCO typically combines both a stop-loss order and a limit order. When placing this type of order, the trader technically places two different orders: a primary order and a secondary order. The primary order is one for taking profit at a preset target price, while the secondary order limits the potential losses at a specific stop-loss level. 

As such, when one order meets the predefined criteria and is executed, the other automatically becomes void. This means that you can either secure profits at the target price or minimize potential losses, based on market fluctuations. In short, OCO helps you establish precise entry and exit points, automate transactions, and mitigate excessive losses. 

For example, assume that you buy BTC at $84,000 when the coin is trading in a range between $84,000 and $86,000. You can place an OCO order with a profit-taking order above $86,000 and a stop-loss order just below $84,000, at the same time.

If the value of BTC reaches or exceeds $86,000, a sell order will be automatically executed at the market price while simultaneously canceling the stop-loss order. However, if the value drops below $84,000, the stop-loss order will be triggered and filled at the market price, and the profit-taking order will be automatically canceled.