“One cancels the other order,” which is commonly referred to as OCO. The meaning of OCO can be understood when you trade using an exchange platform. It is a type of exchange order that cancels other orders post-execution.
Understanding the term
From the OCO definition, it is evident that this conditional order can be used just like the stop loss and limit orders that follow a certain condition to either buy or sell. Usually, traders put in an OCO, which contains both a limit as well as a stop-loss order.
Once a criterion is met, one of the two orders gets canceled, and the remaining one gets executed on the trading platform. OCO might seem like a complicated tool for trading, but it is a professional trader’s favorite option to profit from soaring prices of an asset or to avoid risk when the market nearly crashes.
The “one cancels the other” order is best utilized in an exceedingly volatile market such as cryptos to increase profit and limit losses. But as it takes skillful execution and a complete understanding of the market conditions, only experts can make the most of it. Note that this option is specifically available for limit orders only.