Note: We strongly recommend that you read our guides on Limit orders and Stop-limit orders before proceeding.
Key points to remember
A "One Cancels the Other" (OCO) order allows you to place two orders simultaneously. If one is filled, the other is automatically canceled.
- An OCO order, or “One Cancels the Other,” allows you to place two orders at the same time. It combines a Limit order with a Stop-limit order, but only one of the two can be executed.
OCO orders can enhance the versatility and safety of trades by allowing you to secure gains, limit risks, and automate the entry and exit of positions.
Note: We strongly recommend reading our guides on Limit orders and Stop Limit orders before continuing your reading.
What is an OCO order?
An OCO order, or "One Cancels the Other," allows you to place two orders simultaneously. This type of order combines a Limit order with a Stop Limit order, in which only one of the two orders can be executed.
In other words, once one of the orders is partially or fully filled, the remaining order is automatically canceled. Please note that manually canceling one of the orders will also cancel the other.
When trading on Binance, you can use OCO orders as a form of automated trading. This feature allows you to place two Limit orders simultaneously, which can be useful for securing gains and minimizing potential losses.
How to use OCO orders?
After logging into your Binance account, go to the trading area as shown below. Click on "Stop Limit" to open a dropdown menu and select "OCO."
On Binance, OCO orders can be placed as two buy or sell orders. You can find more information on OCO orders by clicking on the "i" symbol.
After selecting the OCO option, you will be able to access a new trading interface. This interface allows you to set both a Limit order and a Stop Limit order simultaneously.
After placing your OCO order, you can scroll down to view the details of both orders in the Open Orders section.
Limit Order
A Limit order allows you to buy or sell an asset at a specific price. It is visible in the order book and will only be executed at the price you set or a more favorable price.
Stop Limit Order
This is a two-step process that includes the order:
Stop: the price at which your Stop Limit order will be triggered (for example: 553.34 USDT). Please note that this is a Stop Loss (also known as SL Trigger) on the OCO order interface of Binance.
Limit: the actual price of your Limit order after the Stop order is triggered (for example: 553.24 USDT). Please note that this is referred to as Limit SL on the OCO order interface of Binance.
Amount: the amount of your order (for example: 5 BNB).
Total: the total value of your order.
Conditions for setting up an OCO order
For sell orders:
When you have a long position, you can set the Stop price slightly below a key support level to minimize potential losses. If the price drops, this will trigger the stop loss order. Support levels can act as protective measures and are identified based on past behavior, where assets tend to find buying interest.
To increase the chances of execution, you can set the Limit price (Limit SL) slightly below the Stop price, as we did in the example below (SL trigger at 553.34 and Limit SL at 553.24). If the Limit SL is greater than or equal to the SL trigger, there is a higher chance that the order will not be executed, especially if the price falls too quickly.
For buy orders:
When you have a short position and wish to use a buy order as a stop loss order, you can set the Stop price slightly above a key resistance level to minimize potential losses. If the price exceeds the resistance level, your stop loss will trigger the buy order.
Unlike support levels, resistance levels are areas where the price of an asset tends to face selling pressure. For short positions, these levels can act as protective measures and are also identified based on previous price action.
To increase the chances of execution, you can set the Limit price (Limit SL) slightly above the Stop price. If the Limit SL is less than or equal to the SL trigger, there is a higher chance that the order will not be executed, especially if the price rises too quickly.
OCO orders in practice
Consider the price range below for the BNB/USDT trading pair. The white line at the top is a resistance level around $590, and the white line below is a support level around $560.
Now imagine that you want to open a long position in this price range. The current price is $577.46, but you want to wait for a better entry closer to the support level (white line at the bottom). Suppose the desired entry price is $562.91.
If the price does not drop to the desired entry point, you will not complete the trade. But if it falls to your entry point, you will open the trade with your target at $589.52 and your stop loss at $553.34.
If the price follows the blue path, your trade would result in a loss since your stop loss would be triggered ($553.34). For your trade to be profitable, you want the price to follow the yellow arrow (entry at $562.91 and take profit at $589.52).
In this scenario, an OCO order can cover all potential outcomes, ensuring you make profits if the price moves as expected and limiting losses in case of issues.
In our example, the Stop price is 553.34 USDT (the trigger price) and the Limit SL is 553.24 USDT (the price at which the order will be placed). This means your Stop Limit order will activate when the price reaches or falls below 553.34, and a Limit sell order will be placed at 553.24 USDT. However, keep in mind that if the price drops too quickly past 553.24, there is a risk that the Limit order may not be executed.
In summary, if the BNB/USDT pair falls to 553.34 or below, a Limit sell order at 553.24 will be placed.
Conclusion
The OCO order is a simple yet powerful tool that allows you and other Binance users to trade more safely and flexibly. This specific type of order can be useful for securing gains, limiting risks, and even for entering and exiting positions. However, it is essential to fully understand Limit orders and Stop Limit orders before using OCO orders. This knowledge will help you feel more informed and better prepared for your trades.
For more information
What is a Limit order?
What is a Stop Limit order?
Five risk management strategies
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