This is the time when teenagers are taking part in crypto trading. If they can do it, so can you. Knowing how and when to place an order is a skill you need to practice. Indeed, that is the most critical aspect of this newly emerging sector. At the same time, it is necessary to think about accumulating more knowledge and having the right tools to make great gains within this emerging industry.
Whenever you are buying or selling there are some terms you should be familiar with. For instance, you want to sell a digital asset of yours. You need to know what kind of order you need to place.
There is a market order and then there are OCO orders.
A market order is the type of order you use when you want to buy or sell instantly. This type of order makes you buy or sell at the current price on the crypto market. This type of order may be on the risky side.
Let us take a closer look at these types of orders and what they mean for you.
What Is the OCO Order in Crypto Trading?
It’s usually called the OCO order. It means one-cancels the other. OCO order is one of the major types of orders used when trading crypto assets. In the world of cryptocurrency trade exchange, there is a buyer and a seller. The seller may sell assets under two market orders. The buyer may also buy under two market orders.
The seller places two different sell orders. When a buyer accepts or fills one order, the remaining order gets canceled. The same is true for the buyer.
There are ways to place the orders. A limit order and a stop-limit order. Let’s see how to incorporate the two orders through the OCO order.
A limit order is an order you place when you want to sell one of your assets at a higher price. So you put a higher price than the current one.
A stop-limit order is an order you place when you want to sell one of your assets at a lower price. This order is usually placed when a certain type of cryptocurrency’s price goes down. You set a minimum price limit to sell it.
Let’s say you put one limit order and one stop-limit order simultaneously. When one of the orders gets accepted, the other one gets canceled.
Let’s See Two Examples
Two different scenarios on how to use the OCO orders in crypto trading are explained below.
On April 29, 2022, as of 11:00 am, Ethereum’s price range was $2,841.23 at its lowest and $2,973.13 at its highest.
From a seller’s perspective
Let’s say you own Ethereum and you want to sell when it reaches $3000 and also when its price gets below $2,840.
The OCO order lets you place two orders called the limit order and stop-limit order. You put a limit price of $3000. This is called a limit order. Then you put a stop limit price of $2,835. This is called a stop-limit order.
You set the order and your order gets accepted by a buyer. If it’s sold for $3000 your stop-limit order gets canceled and vice versa.
From a buyer’s perspective
When you want to buy a bitcoin that’s worth $39,029, you can place an OCO order. A trader is selling bitcoin and you’re the buyer.
The market/current price will be $39,029. You would want to buy it when it’s lower so you may place a limit price of $38,800. And you would also want to put the maximum price. You can put $39,250 as the stop limit price. When either one of your orders gets filled, you have bought a bitcoin.
What Are the Use Cases of OCO Orders?
One of the major reasons to use the OCO order in crypto trading is for risk management. Placing an order through OCO balances the profit you make and the risk you take.
Brokers and investors are the major players in cryptocurrency trading. The usage of OCO minimizes the amount of loss an investor may face.
It’s best to use OCO orders when your trading strategy shows you that further growth is expected. And you can set the limit order according to the strategy.
You also have to understand the price can go down. So securing your investments is your priority.
There is a case when an OCO order may be blocked. It happens when an uneasy market is observed. The block helps to avoid losing more money from your account.
There is a way to manually set up the orders on a trade opportunity but using an efficient way is better.
How OCO Orders Can Be Used in Crypto Trading?
OCO orders can be used by both newbie and experienced traders. An experienced trader may know the trade trends well. But they cannot predict in which direction the price will go.
From the examples given above, it is advised to learn about trading plans and carve out strategies for your investments.
An OCO order is simple and easy to learn, there are also a few ways of using it. There is no complicated usage of these kinds of orders. You either use them when buying or selling. It is known that to make the trading process easier, different exchange platforms are being introduced. But whatever the platform may be, an OCO order is available.
In conclusion, It is expected that cryptocurrency will be the future. The advantage of crypto is being transparent. It’s a type of system where two parties can exchange values without a third party.
OCO orders can be tricky to master. Your OCO orders need to be supported by your trading strategy. If you are new to the crypto trade, you may experience loss at first. But if you still insist on trying to make it work, it takes a great amount of skill and discipline to gain some profit.
Learning the different cases of when to use the OCO order would save you from confusion. Crypto trades are constantly being updated. As it is a new industry, finding an expert is rare.
Everyone is in the process of trial and error. Which makes it easy to be manipulated by every broker or trader. They are not out to get you but it is very important to have the knowledge, awareness, and the ability to act in the most efficient way possible.
Starting with small trades is better for beginners. Always stay safe and make the best moves!