Placing Profitable Trades Using OCO and OSO Orders The crypto trading market is extremely attractive for new and expert crypto traders because of its strong trends and volatility. Increased volatility means increased risk, and expert traders manage this increased risk by incorporating some effective strategies and conditional orders in their trading. Conditional orders are used to place orders which will be canceled or submitted only if the specified criterion is met. This order type is appropriate when it’s important to automate part or all of the trade order process. Conditional orders are the advanced orders which are automatically submitted or canceled. These orders must be placed before the trade is entered. These are considered the most basic form of trade automation and are used in advanced trading strategies. Traders often use conditional orders for stop loss, Trailing stop loss, stop sell, and various breakout strategies. Two common conditional orders popular among crypto traders are: OCO (OneCancels-the-Other) orders and OSO (Order-Sends-Order) orders. These orders help traders to lock in profits, manage risks, and easily enter or exit positions. Curious about how to include such order types in your trading strategy? Here we will discuss what are these orders, common ways to use them, and how to place an OCO or OSO order. OCO order This order type lets you place multiple orders in the market simultaneously where if one is fulfilled, the remaining one will be canceled automatically. This type of order is useful for both trade entries and exits. The most popular use of OCO order is bracket order which places stop and limit order simultaneously in the market.
So, OCO order is a pair of conditional orders stipulating that if one order executes, then the order will be canceled automatically. Yes! In an OCO order, the trader places two orders at the same time. Usually, this order combines a limit order with a stop-limit order. But, only one order is executed while the other one automatically gets canceled as per the instructions. In other words, we can say as soon as one of the orders gets partially or fully filled as per conditions or the specified instructions, the remaining one will be canceled. Traders can use OCO orders to trade retracements and breakouts. Here the single OCO order performs three actions: •
A stop order to protect you against losses
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A limit order to close the trade at a profit
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An order to close the remaining order
Whenever one can’t predict the market conditions, it’s worth placing two opposite orders in the form of OCO order where one will work and the second one will be erased simultaneously. When it comes to trading on the Binance exchange, one can use Binance OCO orders as a basic form of trade automation. This feature will let traders maximize the take profit and minimize the potential losses. Let’s understand this order type with an example: Assume that you’re an asset say ABC has a price of $100. Due to volatility, you predict that the price may decline, but you don’t want to lose more than $20. Here you place a sell stop order at $80. This means that if the price of ABC drops down to $80, it will be sold at this level. However, if the price increases to $120, the sell-limit order will be triggered. It means your stock will be sold at $120.
Usually, the traders set OCO orders whenever the market is highly volatile. The best crypto trading terminals like TrailingCrypto allow traders to trade smartly and automatically via conditional orders. OSO Order Just like the OCO order, this is also a conditional order which consists of a primary order that will send one or more secondary orders if the primary order is filled. An OSO order is a set of conditional orders specifying that if one order executes, then the other orders are entered automatically. Most of the traders use this order in conjunction with OCO orders. Experienced traders use this type of order to mitigate risks and to lock in gains. An OSO order is the opposite of OCO order in which the execution of primary order cancels. Let’s understand this order type with example: Assume any asset say XYZ is currently trading at $1617.25 and you want to enter a long position at $1617.75 (see below). You want to take profits at $1620.25 and set a protective stop-loss at $1615.25. To break it down: 1. Enter a buy stop order to enter a long position if the price moves up to $1617.75. Since this is a stop order, remember it is placed above the market. 2. Attached to it is an OSO order to trigger a bracket OCO order once the entry order is filled. 3. Once the price moves to $1617.75, the OSO will simultaneously open a long position, and place a sell stop order at $1615.25 and a limit order to sell for $1620.25 (our profit target). 4. Price reaches $1620.25. The OCO order fills the limit order to sell at $1620.25. The remaining OCO order (the sell stop order at $1615.25) is immediately canceled. Benefits of conditional orders
Conditional orders are beneficial for the traders if they don’t have time to watch the charts constantly, and reacting to the market as soon as the price action unfolds. You could use such orders so that your response to a certain price is predetermined. This allows traders to take the advantage of profitable opportunities automatically. When it comes to OCO orders, the best way to use them is to use the resistance and support levels. If there is a strong downward trend, and you think that the price will move down, you could request a buy order just below the support level and a buy order above the support level with an OCO order when there is a short position.