Just what is an OCO order and how exactly does it work? (Kucoin)
OCO order: Automate trades, combine a Limit order with a Stop limit order
Admit it. Crypto has come a long way. Back in 2011, who would have thought that BTC would make it to $10,000? And now, as of the writing of this article, 1 BTC is worth a whopping $24,574. Oh and let’s not forget the moment it hit its all-time high of $69,000 in November 2021.
With time, all the other altcoins have followed suit hence redefining crypto space as a valid asset for investment.
Well, all these factors led to crypto finally being accorded the respect it deserves. And this came with a fast rise in cryptocurrency exchanges giving users direct access to buy, sell, and trade crypto assets.
However, freedom comes with responsibility. It is important that traders come up with strategies to ensure constant profitability. And an OCO order remains to be a solid strategy to analyze a trading opportunity technically and fundamentally.
In this blog post, we’ll explore how you can leverage your trades with an OCO order and basically take your trading strategies to the next level on the Kucoin crypto exchange platform.
An OCO order in a nutshell
OCO in full means “One Cancels the Other”. An OCO order essentially is an exclusive type of order giving traders the ultimate choice to place two different orders concurrently.
This typically involves combining a limit order with a stop limit order at the same instant; however, only one is allowed to be fulfilled. Hence, immediately after one order is executed, the other one is automatically canceled.
Limit and stop limit orders
Before further exploring an OCO order, it's important to understand its core functionalities; limit and stop limit orders.
A Limit order is a specified order to buy or sell an asset at a more favorable price. It is also the preferred order type by most traders when buying crypto. On a “buy limit” order the order is intended to be executed exclusively at a limit price or an even lower price. Alternatively, on a “sell limit” order, orders are fulfilled only at the limit price or above it.
A “buy limit” order essentially gives investors an opportunity to buy assets at their desired and friendly price or even less, unlike a market order. It is important to note though that in case the price doesn’t reach the specified price, it is impossible to fulfill the limit order.
A Stop Limit order fundamentally merges a stop trigger together with a limit order. With a Stop limit order in place, traders have the ability to place the minimum amount of profit they’re willing to walk away with and also the maximum amount they’re ready to lose.
When the trigger price reaches, a limit order is automatically executed with or without the trader’s presence. In reality, the stop price acts as the trigger price for the exchange to fulfill a limit order.
Traders can alter the limit price which is often set typically higher than the stop price for a purchase order and lower for a sell order.
Using an OCO order and executing it on Kucoin
An OCO order brings on board an automation feature combining a limit and a stop limit order. This way, traders can automate their position exits by placing an OCO order in two instances of taking profits and realizing losses.
An OCO order plays well in choppy markets where the price can go in a different direction rather quickly. And with the automation feature, it helps that traders do not need to be stuck in their trading stations all day.
Advanced traders are known to conveniently place stop-limit orders in accordance with resistance and support levels and in combination with the asset’s volatility.
Executing an OCO order in Kucoin
If you’re yet to open a Kucoin account, you just might be missing out on a Crypto exchange platform making waves in the crypto space.
With its low fees, strong user base, advanced trading features, and great customer support, the exchange is breaking odds in delivering the much-needed value for crypto traders. And yes, it's the leading Crypto exchange for Altcoins aka The Peoples’ Exchange.
As a trader, having a dynamic and solid trading platform is of the essence. And Kucoin certainly makes the cut.
Using an OCO order on Kucoin entails a few easy steps:
- Login to Kucoin. Whichever currency pair you intend to trade, navigate to its trading interface. For this example, let’s go with the BTC/USDT crypto pair.
The OCO order will be located in the “Spot” section and under the “Stop limit”.
2. Upon selecting an OCO order, you’ll have an interface that appears as shown below:
Let’s explore each field and what it represents:
- Price- This typically represents the price of your limit order. Essentially this is the amount that will appear on your order book and you’re free to set it to an amount that you’d be comfortable to exit your position and take a profit. (in a scenario where the trade goes your way)
- Stop- This represents the stop-limit trigger price. Hence, upon the asset price reaching the designated trigger, it will proceed to replace the regular limit order with a stop-limit order. In many instances, traders are known to set a stop trigger a bit higher or lower than the stop-limit price in an effort to give the order time to be executed at the correct price.
- Limit- This represents the price of your stop-limit order. This amount will appear on your order book when the stop price is triggered. You’re free to set this amount to where you’d like to exit your position and take a loss. (in a scenario where the trade doesn’t go your way)
- Amount- This represents the exact value of your order.
Supposing you bought 0.002BTC at $22,500, with a vision that the price will eventually go up. Nevertheless, you’re not completely sure that the price will rise, or even fall down further; hence you want to minimize your losses.
In this instance, you can put down an OCO order to execute both a profit-taking limit order at 24,000 USDT and also a loss-minimizing stop-limit order at 21,500 USDT that is triggered at 21,750 USDT.
Once you place your OCO order, your open position will appear in the Advanced orders tab where you’re free to monitor or cancel it.
If you’re lucky and indeed the price of BTC reaches 24,000 USDT, your sell-order will be fulfilled and the stop-limit order will be canceled automatically.
Alternatively, if BTC price falls to or below 21,750 USDT, the stop-limit order for 21,500 USDT will be triggered. This factor minimizes your losses in case the price drops further.
Be keen to note that your assets will not be locked not unless your order is triggered. In a case where your assets are inadequate by the time you meet the trigger price, the order will not be executed, but your assets will be locked.
Conclusion
An OCO order creates the necessary balance to optimize trading outcomes. It caters to the possibility that a trade can go either way. This way, you eliminate trading on an emotional and biased perspective.
Hence, it is a simple yet powerful feature, giving Kucoin users the ultimate benefit to trade in an automated and secure manner.
Have you utilized an OCO order yet?
Open your Kucoin account here and let’s leverage your trades with an OCO order>>
Affiliate Disclosure: This blog post may contain affiliate links.
New to trading? Try crypto trading bots or copy trading
