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How to trade cryptocurrencies using OCO orders?
Want to earn more profits in crypto? Looking for a smart trading feature that ensures good profits along with automated trading solutions? If yes, considering OCO (One-Cancels-The-Other) order is the better option. This order type allows its traders to reduce risks in volatile cryptocurrency markets. Additionally, this trading strategy also facilitates decision-making and taking of positions.
And, Growlonix is glad to present this trading feature. Now two orders can be connected with a conditional link so when either of them gets filled, the other one will be cancelled automatically by the system. If you are not new to crypto trading then you might also have heard or seen this option to place OCO order on any trading platform or exchange. These orders are pretty helpful for you to have a limit sell and stop-loss order at the same time.
An OCO order is a conditional order where two orders are placed simultaneously for a particular trade, where one order is canceled when the other one is filled. This may sound a little bit complicated, but it’s fairly easy to understand this context:
Suppose you buy any cryptocurrency say ABC trading at $40. Your profit target is 50% and you don’t want to lose more than 10% in your position. Here you might place an OCO order consisting of a sell limit of $52 and a sell stop at $36. If the asset price reaches the value $52, your position will be closed with a profit and your sell stop order will be canceled immediately.
To place an OCO order, you have to choose a limit order price (buy/sell) and check the option OCO. So, OCO orders help traders lock in profits, manage risks, and easily enter or exit positions. This allows traders more time to analyze the crypto market with a lesser time spent on each trade.
How experienced traders use OCO orders in their trading strategy?
Experienced traders who know about OCO order tend to rely on it for a variety of reasons. For example:
- These orders make it easier for the traders to manage risks when entering a position
- They usually use OCO orders to trade retracements and breakouts
Placing OCO orders at Growlonix provide an opportunity to the traders to take care of their profits and losses simultaneously.
How to place OCO order at Growlonix?
- Create an account on Growlonix first and log in.
- On the Settings page, enter your API Key and Secret key
- Select the exchange. (A drop-down menu on the top left)
- Select OCO order type.
- Select Base and Quote coin.
Let’s understand it with an example:
- Select the number of coins which needs to be sold.
Example: 5, 10 coins. (This quantity could be in the fraction)
- Fill in the Stop Loss fields.
- Fill in the Take Profit fields.
Suppose the current market price of any coin say ETH is $100. Now you have placed an OCO order with Taking Profit at $110 and Stop Loss at $90. If the market price for ETH hits $110 then, the Take Profit option will be executed and at the same time, the Stop Loss order will be canceled.
Imagine if the market doesn’t go well, and the price hits $90. This time stop loss order will be executed and the take profit order will be canceled out immediately.
How does OCO order work?
OCO orders are used in crypto trading as a way to link the limit order with a stop loss order. Once the asset price hits the stop loss price target, there will be no need for the other order type to take profit, or vice versa.
If a trader owns the coins of any cryptocurrency say, ABC, currently trading for $50 per coin. He believes that the coins are undervalued, and expects the price to reach another $40. To make sure he locks in the gains, the trader places a sell limit order for $60, the maximum price at which he wishes to hold the crypto coins. He also places a trailing stop order for $10, which will sell the crypto assets if it drops $10 from its current high. As the prices climb to $60, the trader’s sell limit order is triggered, selling his coins, and cancelling his trailing stop.
When to use OCO orders?
This smart trading feature at Growlonix allows users to take advantage of a number of real-life use cases which the traders may face on the daily basis. Let’s understand these use cases with examples:
1. Stop-loss and Take profit: Setting up stop loss and take profit is the most popular scenario for using OCO feature in your trading strategy. First, you will place a limit order as your Take Profit. And then, it’s time to place stop market order as your stop loss and link it to the limit order set above. Stop market order will guarantee that you will exit the position at the best possible price.
2. Buy more: This strategy works best whenever you intend to increase the volume of your base currency during the market dip or anticipating after a breakout. This scenario assumes to place a limit buy order to buy the dip accumulating more coins whenever the reaches to the support line and a stop buy order to buy on a breakthrough coin in case it breaks the resistance line and shows an uptrend.
3. Exiting or averaging down: This is the most interesting scenario of using OCO order. This strategy is beneficial in the case when you need to decrease the average purchase price of an asset to increase or exit your position on more favorable terms. You can place a limit sell or trailing limit sell order to exit your position in case the price reaches to the desired mark, and the limit buy or trailing limit buy order to accumulate more coins and reduce the average purchase price. In case the limit buy order is filled, the OCO link will cancel the limit sell order, since the average purchase price has been reduced, and here you may sell the entire position at a lower price.
Benefits of OCO orders
When placed right, OCO orders can be a great feature to improve your crypto trading experience. Here are the benefits of using this order:
Improve risk-reward management
Less market monitoring
Securing profits for the opened positions
Experienced crypto traders use OCO orders as a tool to limit their risks while entering the position. While trading in Binance exchange, you can use OCO order as a basic form of trade automation.
It’s a simple yet powerful tool that allows users to trade in a smart, safe, and versatile manner. This special order type is quite useful in locking in profits and limiting the risks for entering or exiting the positions.
In trading terms, OCO orders are a great way to sell at a higher price or to place an order on the Binance platform. Traders can add OCO orders at Binance via Growlonix directly. To place an OCO order on Binance, click on the arrow beside OCO and then select OCO from the list. This will further show more fields where you may set the price and quantity.