NOTA: Antes de continuar lendo, recomendamos fortemente que você leia nosso guia sobre ordens limitadas e ordens stop-limit.
Key points
A 'One Cancels the Other' (OCO) order allows you to place two orders simultaneously, where one order will automatically cancel the other once it is executed.
- Um cancela o outro (OCO) permite que você faça dois pedidos ao mesmo tempo. Combina uma ordem limite e uma ordem stop-limit, mas apenas uma delas pode ser executada.
OCO orders can make trading more flexible and secure by locking in profits, limiting risks, and automatically opening and closing positions.
Note: Before continuing to read, it is strongly recommended that you read our guide on limit orders and limit take profit stop loss orders first.
What is a one cancels the other order?
One Cancels the Other (OCO) orders allow you to place two orders simultaneously. It combines limit orders and limit take profit stop loss orders but only one of them can be executed.
In other words, as long as one of the orders is partially or fully executed, the other order will be automatically canceled. Please note that manually canceling one order will also cancel the other order.
When trading on the Binance platform, you can use OCO orders as a basic form of trade automation. This feature allows you to choose to place two limit orders simultaneously, which helps to take profit and minimize potential losses.
How to use OCO orders?
After logging into your Binance account, go to the trading area as shown in the image below. Click on 'Limit Take Profit Stop Loss' to open the drop-down menu, then select 'OCO'.
On Binance, OCO orders can be placed as a pair of buy or sell orders. Click the 'i' icon to view details related to OCO orders.
After selecting the OCO option, a new trading interface will load, where you can set both limit orders and limit take profit stop loss orders simultaneously.
After placing the OCO order, you can scroll down to view the details of both orders in the 'Current Orders' section.
Limit order
A limit order allows you to buy or sell an asset at a specific price. It will appear on the order book and will only be executed at the price you set or a better price.
Limit take profit stop loss order
The whole process is divided into two steps:
Take profit stop loss price: The price that triggers your limit take profit stop loss order (e.g., 553.34 USDT). Please note that this is marked as stop loss price (or stop loss trigger price) on Binance's OCO order interface.
Limit price: The actual price of your limit order after the take profit or stop loss is triggered (e.g., 553.24 USDT). Please note that this is marked as stop loss limit on Binance's OCO order interface.
Quantity: The size of the order (e.g., 5 BNB).
Total amount: The total value of the order.
OCO order setting conditions
Sell order:
When you hold a long position, you can set the trigger price slightly below the key support level to minimize potential losses. If the price falls, a stop loss order will be triggered. The support level acts like a safety net, determined by historical price behavior, where assets typically attract buying interest at this price level.
To increase the probability of execution, you can set the limit price (stop loss limit) slightly below the trigger price, as shown in the example (stop loss trigger price is 553.34, stop loss limit is 553.24). If you set the stop loss limit above or equal to the stop loss trigger price, the likelihood of the order not being executed increases, especially in cases of rapid price declines.
Buy order:
When you hold a short position and wish to use a buy order as a stop loss, you can set the trigger price slightly above the key resistance level to minimize potential losses. If the price rises and breaks through the resistance level, your stop loss setting will trigger a buy order.
In contrast to support levels, resistance levels are areas where the asset price may encounter selling pressure. For short positions, these price levels act like a safety net, determined by historical price behavior as well.
To increase the probability of execution, you can set the limit price (stop loss limit) slightly above the trigger price. If you set the stop loss limit below or equal to the stop loss trigger price, the likelihood of the order not being executed increases, especially in cases of rapid price increases.
OCO order practice
Take the price range of the BNB/USDT trading pair as an example. The white line at the top represents the resistance level around $590, while the white line at the bottom represents the support level around $560.
Assuming you want to open a long position within this price range. The current price is $577.46, but you want to open a position at a better price closer to the support level (bottom white line). Assuming your expected opening price is $562.91.
If the price does not drop to your desired entry point, you will not trade. However, if the price drops to your expected entry point, you will open your position at a target price of $589.52 and a stop loss price of $553.34.
If the price follows the blue path, your trade will incur a loss because the stop loss order (at $553.34) will be triggered. If the price follows the path indicated by the yellow arrow, your trade will be profitable (opening price at $562.91, take profit price at $589.52).
In this case, OCO orders can cover all possible outcomes, ensuring you take profit when the price movement meets expectations while stopping losses when the trading situation is unfavorable.
In our example, the trigger price is 553.34 USDT (trigger price), and the stop loss limit is 553.24 USDT (order price). This means your limit take profit stop loss order will be activated when the price reaches or falls below 553.34 USDT and will sell the limit order at a price of 553.24 USDT. However, please note that if the price rapidly drops below 553.24 USDT, the limit order may not be executed.
In short, if the price of BNB/USDT drops to 553.34 or below, the system will sell the limit order at a price of 553.24.
Conclusion
OCO orders are a simple yet powerful tool that allows Binance users to trade in a safer and more flexible way. This special type of order helps to lock in profits, limit risks, and even used for opening and closing positions. However, before using OCO orders, it is essential to have a thorough understanding of limit orders and limit take profit stop loss orders. This helps you better grasp trading strategies and prepares you for your trades.
Further reading
What is a limit order?
What is a limit take profit stop loss order?
Five risk management strategies
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