OCO in Spot Trading: How It Works

OCO—"One Cancels the Other"—is quite an interesting tool in spot trading. It's a conditional order type that helps traders automate their strategies. Pretty useful for risk management too.

The Basics

You place two orders at once. Simple as that. The system links them together.

1. Two orders, one decision: You set up a primary order alongside a stop-limit order. They're connected.

2. Main order: This is what you really want to happen. Buy something at a specific price, maybe.

3. The safety net: Your stop-limit has two parts:

   • A trigger price (when it activates)
   • An execution price (what you actually get)

It seems the most important part is what happens next. When one order fills, the other just... disappears. Gone. That's the whole point.

When You'd Use It

Traders love this for setting profit targets while having an escape plan. Not a bad idea, honestly.

You could also use it for breakouts. The market might go up or down—who knows? Set orders in both directions and let the market decide. Kind of surprising how simple yet effective this approach is.

OCO orders help you stick to your plan. No need to stare at charts all day. No emotional panic-selling at 3 AM. Different platforms implement this slightly differently, though. Not entirely clear why they can't standardize it, but that's trading for you.