One Cancels the Other (OCO) is a popular order type in forex trading that allows traders to set up two simultaneous orders on the same currency pair – one to take profit and the other to limit losses. This means that if one order gets executed, the other one will be automatically canceled, hence the name “One Cancels the Other.” In this article, we will discuss how to set up OCO orders on forex.
Step 1: Choose a Forex Broker
Before setting up an OCO order, you need to choose a reliable forex broker that offers this order type. Most forex brokers offer OCO orders, but it’s important to check their trading platform to ensure they have this feature. Some popular forex brokers that offer OCO orders include IG, Oanda, and Forex.com.
Step 2: Log in to Your Trading Platform
Once you have chosen a forex broker, you need to log in to your trading platform. The trading platform is where you can access your account, view currency pairs, and place orders. Most forex brokers offer trading platforms on desktop, mobile, and web-based versions, so you can choose the one that suits you best.
Step 3: Choose a Currency Pair
After logging in to your trading platform, you need to choose a currency pair that you want to trade. Forex trading involves buying and selling currency pairs, so it’s important to choose a pair that you are familiar with and has good liquidity. Some popular currency pairs include EUR/USD, USD/JPY, and GBP/USD.
Step 4: Choose Order Type
Once you have chosen a currency pair, you need to choose the order type. In this case, you need to select the OCO order type. Most trading platforms have a drop-down menu where you can choose the order type. Once you have selected the OCO order type, you will see two order boxes – one for the buy order and the other for the sell order.
Step 5: Set the Stop Loss and Take Profit Levels
After selecting the OCO order type, you need to set the stop loss and take profit levels. The stop loss level is the price at which your trade will automatically close if the market moves against you. The take profit level is the price at which your trade will automatically close if the market moves in your favor.
To set the stop loss and take profit levels, you need to enter the price levels in the respective order boxes. For example, if you want to set a stop loss at 1.2000 and a take profit at 1.2200, you need to enter these levels in the order boxes.
Step 6: Place the Order
After setting the stop loss and take profit levels, you need to place the order. To do this, you need to click on the “Place Order” button on your trading platform. Once the order is placed, it will be displayed in the “Open Positions” tab on your trading platform.
Step 7: Monitor the Trade
Once you have placed the OCO order, you need to monitor the trade. This means keeping an eye on the market and watching how the trade is progressing. If the market moves in your favor, your take profit order will be executed, and if the market moves against you, your stop loss order will be executed.
Conclusion
In conclusion, OCO orders are a great way to manage risk and protect profits in forex trading. By setting up two simultaneous orders on the same currency pair, traders can limit their losses and lock in profits. To set up an OCO order, traders need to choose a forex broker, log in to their trading platform, choose a currency pair, select the OCO order type, set the stop loss and take profit levels, place the order, and monitor the trade. With these steps, traders can effectively use OCO orders to improve their forex trading performance.
