What is One Cancels the Other Order (OCO)?
One Cancels the Other Orders or OCO’s are a coupled pair of orders that can be placed upon a cryptocurrency asset. These orders simultaneously self execute once certain conditions are met. Specifically, if the conditions of one order are met, then the other order automatically cancels. These are sometimes referred to as the ‘stop order’ and a ‘limit order.’
OCO’s function via a combo of cross conditional orders. For example a pair of ‘buy’ and ‘sell’ orders can be placed on an asset at a specific value threshold. This means that if the limit order price threshold is met, the limit of the buy or sell order is achieved, therefore the corresponding stop order comes into effect and is automatically canceled.
OCO’s also have an inverse order set. Referred to as an OSO, or Order Sends Order. These OSO’s function in the same way as OCOs, except these trigger an order when a condition threshold is met, rather than canceling it.
In simplistic terms, OCOs and OSOs are a utility that creates checks and balances for traders. Similar to smart contracts found in blockchain, they offer an efficient stablising method for traders to interact with potentially erratic assets.
OCO’s and OSO’s are valuable tools in the hands of traders as they offer a means for traders to mitigate some of the risks associated with volatile assets. Many trading platforms offer the capacity for multiple OCO’s that interact with each other in a rather complex fashion. The purpose of the utilities is to incentivize traders to join the platform by mitigating risks factors while maximizing their profit potential. This utility is attractive, offering greater stability both to the platform and to its traders.
This interaction of multiple OCO’s and OSO’s can create a complex interaction of checks and balances. These are referred to as ‘One-Triggers-a-One-Cancels-the-Other’ or OTOCO. These can create complex inter-conditions that can take place over different time periods and are rather flexible.
These orders can take palace across a ‘day order’ or a ‘good-till-canceled’ order. Or can even be altered after the OCO has been placed. As long as the OCO functions within certain parameters on the trading platform. In this way, these functions create a means for traders to hedge their investments with complex interactions of upper limits and ground floors across a period of time, maximizing both potential and efficiency