- Traders are using one-cancels-the-other orders to safeguard their automated trading practices.
- OCO orders are conditional; whenever certain conditions are met, one order gets executed, and the other gets canceled.
- Traders utilize this strategy to control risks, increase potential gains, and make a safe door for entry and exit.
Various veteran traders across the globe utilize OCO orders to hedge market risk. Some stocks trade over a huge price range and may fall or rise unexpectedly.
OCO orders facilitate traders to perform with their total might in the market. They get the leverage to identify the range while increasing their profits and reducing losses.
To make sure that the trading process does not lead to huge losses or irreversible damage, OCO orders act as a safety measure that reduces stress and potential emotional trauma.
What is a One-cancels-the-other (OCO) Order?
One-cancels-the-other order is one of a kind of instruction or order given to an automated software or a program that assists during stock trading. This type of order comes with conditions that result in one order automatically getting canceled if the other order is fulfilled.
The OCO order comes with two conditions: whichever is first met, that order requirement is executed. There could be an order to prevent loss and offload shares when the price falls below the acceptable range and a separate order to sell shares when their value rises to a desired range.
If a stock trades between $40 and $50; the trader can put up a selling order to instruct the automated trading software to sell shares. Conversely, the trader can place a buy order if the price falls below $40.
Advantages of Using OCO Orders for Traders
The mitigation of risks involved and control over the level of damage in losses are huge benefits of using OCO orders in trading. The stop order or limit order provides the traders with security, such that they can walk away from the trade if there is a chance of unwanted losses or stay in the game when there is a profit potential.
The trading process becomes automated with the use of this type of order, but not only that, it creates a safe environment that is free of stress and free of constant worrying regarding trading.
OCO orders allow traders to have greater flexibility in decision-making and make the trading experience feel like a breeze. Having fewer things to stress about in the crypto trading market is always good. It is a feature that minimizes the chance of potential risks involved in automated trading processes.
It helps to improve trader discipline and encourage safe trading practices that do not cause harm to a person’s physical and mental health.
In the end, OCO orders are a great trading tool for anyone, whether they are an entry-level or a seasoned trader. It is considered as an ultimate tool to make trading profitable and motivate new traders to take risks and grab opportunities.
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