I’ve been reading through the excellent babypips school and i’m having problems understanding the example.
As I understand it, OTO means that you place one order and when it is completed, it triggers the next order. However I cant picture which figures are for which order below. Could someone explain it to me in a different way?
Here’s the text from the babypips school;
From: Babypips pre-school - Page “Types of Orders” subheading “One-Triggers-the-Other” (I can’t post the URL as I haven’t made 5 forum posts yet)
One-Triggers-the-Other
An OTO is the opposite of the OCO, as it only puts on orders when the parent order is triggered. You set an OTO order when you want to set profit taking and stop loss levels ahead of time, even before you get in a trade.
For example, USD/CHF is currently trading at 1.2000. You believe that once it hits 1.2100, it will reverse and head downwards but only up to 1.1900. The problem is that you will be gone for an entire week because you have to join a basket weaving competition at the top of Mt. Fiji where there is no internet.
In order to catch the move while you are away, you set a sell limit at 1.2000 and at the same time, place a related buy limit at 1.1900, and just in case, place a stop-loss at 1.2100. As an OTO, both the buy limit and the stop-loss orders will only be placed if your initial sell order at 1.2000 gets triggered.
I hope this helps, i showed the most common usage is a double OSO (one sends the other) or OTO (one triggers the other) they are the same. But really in this set up you would need the sent orders to also be OCO since once your SL or TP is hit you want it to remove the unused order but that’s more complex order trees. I think this will answer your question though.
Hi,
I have also read that text and MeiHua’s post several times. But couldn’t get the answer. Would you please explain it again. I think it should be like: Set a buy order at 1.2000(parent order) and then a dependent sell at 1.2100 which should be closed at 1.1900.
It seems to be simple but I need some help.
You’re waiting for the price to hit 1.2000 at which point you want to
A) SELL and open the trade (as you’re shorting it and expecting it to go down).
Only when that first trade is active do you want to trigger (queue up) the other two trades;
B) one as a stop loss (stop order) (BUY at 1.2100)
C) and one to take profits (limit order) automatically (BUY at 1.1900).
Yes basically you have an order tree as shown above. Very creative illustration btw marty. The 1st order is an OSO but instead of just sending a single order it sends a set of orders (your profit target and stop loss) chained together by OCO. This is so that if either your target or your stop is hit you dont leave the other order which was never filled in the market. I dont really see where your getting off track here, it is really quite simple. It is very important to understand how orders work because this is your avenue to access the markets, your toolbox if you will.
I agree, it really is quite simple when you understand it. I think what confused this for me was that it was a short order rather than a long and not realising that the orders do not run sequentially, rather the first order sends two orders. having a diagram next to the description would have explained it perfectly for me.
I too initially perceived it the way that pedramslhr did.
Me too I didn’t understaund what they wanted to say. I think there is a fault in values of exchange rate used in examples. I found another example in another website :
Thanks @MartyMcFly you made it very simple. I think the example in the lesson is what confusing everyone. The definition of OTO is perfectly given, but the example look puzzled. But yours made it very simple.
Thanks again
