Everything you Need to Know About OCO Orders: KuCoin Tutorial
The steady rise of crypto exchanges has given users an easy way to trade cryptocurrencies, as well as the option to properly utilize numerous tools to estimate a trading opportunity from a technical, fundamental, and sentiment perspective.
They now have the option to buy and sell crypto assets for themselves online instead of doing so through brokers and advisors. However, as with venturing into any business, you need all the knowledge you can get on how to perform most efficiently.
In this article, we will cover what an OCO order is, as well as how to use it to empower your crypto trading strategies on KuCoin.
What is an OCO Order?
A “One Cancels the Other” order, or OCO, is a special type of order that enables traders to place two separate orders at the same time. It works by combining a limit order with a stop-limit order, placing them at the same time, but only allowing one to be executed - as soon as one is executed, the other one is canceled.
However, before we dive deep into OCO orders, let’s quickly define the limit and stop-limit orders:
A limit order is one of the most popular order types for buying crypto. A limit order is a type of order to purchase or sell an asset at a specified price or better. When it comes to buy limit orders, the order is aimed to be executed only at the limit price or lower, while sell limit orders are only executed only at the limit price or above.
By using a buy limit order instead of a market order (which buys assets instantly at the price offered by sellers), the investor is guaranteed to pay their specified price or less. Of course, this comes with one downside - if the price does not reach the order qualification price, the limit order will not be executed.
A stop-limit order combines a stop trigger with a limit order. Stop-limit orders enable traders to set the minimum amount of profit they’re ready to realize, as well as the maximum they’re willing to lose on a trade.
Once a stop-limit order is set, all the trader has to do is wait for the trigger price to be reached. When that happens, a limit order will be placed automatically, even if the trader is away from their keyboard, offline, or logged out.
In a stop-limit order, the stop price acts as the trigger price for the exchange to place a limit order. You can customize the limit price, which is usually set higher than the stop price for a buy order and lower for a sell order.
How to Use the OCO Order
An OCO(One Cancels the Other) order allows you to place two orders at the same time. As we mentioned previously, it combines a limit order, with a stop-limit order.
This gives users the option to automate their position exits by setting an OCO order for both taking profits and realizing losses. OCO is very handy for choppy markets, where the price is quick to push in either way. It is also invaluable for traders that may want to step out of their trading station, rest their eyes, and let the order act by itself.
Seasoned traders strategically place stop-limit orders by considering resistance and support levels and the asset’s volatility.
How to Place an OCO Order on KuCoin
To use the OCO order on KuCoin, log in and head over to the trading interface for your favorite cryptocurrency pair (in our case, we are using the BTC/USDT trading pair).
Select the OCO order, which will be located next to the other order types.
KuCoin OCO Order Interface
Once you have selected the OCO order, KuCoin will present you with an OCO interface, as shown above. Let’s explain what each field is for:
➢ Price: This is the price of your limit order. This amount will be first visible on your order book. Set this number to wherever you’d like to exit your position and take a profit (if the trade goes your way).
➢ Stop: This is the stop-limit trigger price. Once the asset price reaches the specified trigger, it will replace the regular limit order with a stop-limit order. Traders usually place a stop trigger slightly higher or lower than the stop-limit price, just so the order would have time to be filled at the correct price.
➢ Limit: This is the price of your stop-limit order. This amount will be visible on your order book after the stop price is triggered. Set this number to wherever you’d like to exit your position and realize a loss (if the trade doesn’t go your way).
➢ Amount: This field represents the value of your order.
As an example, let’s say that you just bought 0.001 BTC at the price of 20,500 USDT because you believe the price is more likely to go up. However, you aren’t completely certain if the price will head up, or tumble further down, so you’d like to minimize your losses as well.
KuCoin OCO Sell Order Example
In this case, you can place an OCO order to utilize both a profit-taking limit order at 22,000 USDT, as well as a loss-minimizing stop-limit order at 19,500 USDT that triggers at 19,750 USDT.
KuCoin OCO Open Order Tracking
You can find your open position in the Advanced Orders tab at the bottom of the KuCoin trading page, where you can monitor the position, or cancel it.
If your prediction is correct and the price of BTC does rise above 22,000 USDT, your sell order will be executed, and the stop-limit order will be automatically canceled.
On the other hand, if you end up being in the wrong and the price drops to or below 19,750 USDT, your stop-limit order for 19,500 USDT would be triggered. This would potentially minimize your losses, in case the price drops even more.
One thing to note is that your assets will not be locked unless your order is triggered. If your assets are insufficient by the time you meet the trigger price, your order will fail. Once your order is triggered, however, your assets will be locked.
The OCO feature is a simple yet powerful tool, that allows you and other KuCoin users to trade much more automated and secure way. Using an OCO order is beneficial when you aren’t sure about where the trade will go, and want to make sure you won’t miss out on taking a profit or getting out of the trade with only a small loss.
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