TP & SL Vs OCO

Beginner Questions
1

Hi all,

I am struck in a situation where I am trying to understand the concept of OCO vis-a-vis to Take Profit and Stop Loss. I have practicing with Etoro platform and they have an option to set TP & SP on every position. We can also modify both while the position is opened and can also close the position manually.

Currently, I am also practicing with CMC Markets to get feel of OCO orders as one cancels the other order if any one get triggered.

Now, my question is how can I relates or set stop loss and take profit in OCO. May be I am asking wrong question but I must need to apply SL & TP before opening the position. So, is it possible to apply both in OCO.

Thanks in advance for your suggestion.

Regards
Randip

2

If you want to use and OCO to execute a SL or TP then you put that on after you enter your trade, not before. It’s fairly simple. The OCO would include a sell order and a buy order such that if one is triggered the other is cancelled. If you were to put both orders in separately, when one got triggered the other would still be active and could later get triggered and open a new position you don’t want. The way most platforms allow you to put SLs and TPs on specific positions is basically an OCO function without saying it explicitly.

3

Hi Rhody,

Thanks for your helping me make this weird thing understand. I have successfully applied SL & TP to OCO.

Thanks
Randip

5

Hi Randip. Please share your experience on it. A lot of users would love to know it.

Forex Forever.

6

Hi Kuerten,

We assume to open buy position to explain the method. Follow the steps:

Step - I: Open a Market Order in the direction of Buy position.
Step - II: Now, open an OCO immediately after placing market order in the ‘OPPOSITE’ direction i.e. sell direction and apply limit price (Take Profit) and stop price (Stop Loss) to it.

Now, there will be two scenarios as follows:
Firstly, price (market order) will hit the limit or stop price and OCO get triggred resulting in closing market order and OCO as well. In the mean time, OCO will show as pending order status.
Secondly, if you wish to close the position (market order) before hitting limit and stop price, then simply close the market order and cancel the OCO.

Important Points:

  1. Do not forget to cancel the OCO if you closed the market order before hitting either of the limit or stop price otherwise it will trigger lator.
  2. Always place OCO ‘AFTER’ Market order. It will be good to place in next 1-2 minutes of opening of Market order.

Hope this will help you in placing an OCO.

Regards
Randip