Bitsgap is glad to present you with a new smart trading feature: One-Cancels-The-Other (OCO) orders. Now two orders can be connected between each other with a conditional link so when either of them gets filled, the system automatically cancels the other.
This feature can be used even if you buy crypto with a limit order on the exchange that does not support OCO orders. Now you can turn any opened position into a smart order by setting Limit and Stop and connecting them using OCO so they work as Stop Loss and Take Profit.
Moreover, OCO can also be used for accumulating coins in order to reduce the average entry price and close a position on favorable, as well as for entering the rapidly rising market on the igniting uptrend. The introduction of the OCO feature, combined with the Stop Orders and Trailing option, is the next step in bringing advanced trading instruments from professional trading to the world of crypto.
When to use OCO orders?
The new smart trading features allow Bitsgap users to take advantage of a number of real-life use cases which they face on a daily basis. Below you will find some examples of the most common use cases for this type of Smart orders.
Stop-Loss and Take-Profit
Setting up SL/TP is, by all means, the most popular scenario for using OCO feature. This scheme presumes that you have some available base currency on your account.
First, place a Limit order as your Take-Profit. This order will appear in the order book and reserve your funds for the deal in case the asset price reaches the target value.
Then, place a Stop-Market order as your Stop-Loss and link it with the Limit order from the previous step. Stop-Market order will guarantee that should the price reach the bottom mark, you will exit the position at the best possible price. This order won't reserve any additional funds from your deposit.
Buy More strategy works best when you intend to increase the volume of your base currency during a market dip or anticipating a rally after a breakout.
This scenario presumes to place a Limit Buy order to Buy the Dip accumulate more coin when the price reaches the support line and Stop Buy order to Buy on a Breakthrough coin in case it breaks the resistance line and ignites an uptrend.
Thanks to the OCO link, the system will cancel the Limit Buy order in case of a price surge. This will unlock funds to fill the Stop Buy order. Just make sure you have enough quote currency to fill the Stop Buy order.
Exit or Averaging Down
One of the most interesting scenarios of using OCO orders is Averaging Down the purchase price. You may find it helpful when you need to decrease an average purchase price of an asset to increase or exit your position on more favorable terms.
Place Limit Sell order to exit your position in case the price reaches the desired mark, or Limit Buy order to accumulate more coin and reduce the average purchase price.
In case the Limit Buy order on the bottom gets filled, the OCO link will cancel the Limit Sell order, since the average purchase price has been reduced and you may now sell the entire position at a lower price.
In case the top Limit Sell order gets filled, the system will terminate the Limit Buy order since the entire position has been sold at the desired price.
How traders can benefit from OCO orders?
OCO orders, when placed right, may become a great feature to improve your crypto trading experience. Here are some benefits of using OCO when trading:
Improving risk-reward management
One-Cancels-the-Other orders allow traders to set a pre-defined risk to reward ratio. By setting pre-determined Stop-Loss and Take-Profit increases control over their funds and make trading more predictable.
Securing profit for opened positions
Protect your winning positions by setting OCO orders with minimum profit to protect your earnings in case of an unexpected trend reversal. Set your profit target with a limit order and then use OCO to link it with a stop order to protect your potential returns.
Less market monitoring
No matter what strategy you use and how much funds you allocate for day trading, automated bots, or HODL, OCO orders may simplify and semi-automate your trading experience and spend time on making research, rather than monitoring charts.
Experienced crypto traders use OCO orders as an instrument that helps to limit their risks when entering a position. Their risk-management feature makes them especially useful when the market is on the brink of a significant move in either direction, but there is no confidence in which direction it will be.