OCO Order (One-Cancels-Other)
An OCO order combines two orders—when one executes, the other automatically cancels. Typically pairs a take-profit limit order with a stop-loss order.
Understanding the Concept
OCO orders let you set both your profit target and risk limit simultaneously. You don't have to babysit the trade. If price hits your take-profit, the stop-loss cancels. If price hits your stop-loss, the take-profit cancels. It's essential for traders who can't watch charts 24/7 or trade crypto markets that never close. The limitation is you can only have one of each—if you want to scale out at multiple targets, you need multiple OCO orders or manual management.
Real-World Example
You buy Bitcoin at $40,000. You set an OCO with a sell limit at $44,000 (take-profit) and a sell stop at $38,000 (stop-loss). Price hits $44,000—profit taken, stop-loss cancels. You walk away with 10% gains.
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