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How To Add OCO (One-Cancels-Other) Orders
In this video, I want to talk to you about OCO orders- One Cancels Other orders. Now what I want to do is, let's assume that we're in the market. Let's go ahead and hit Buy Market. We are now in the market long.
In a previous video I showed you how we could take a Stop order, place it below the market to protect ourselves from downside losses. I also showed you a Limit order, which we could place above the market, and take profits if the market reaches a specific target level. Now, this is a nice way of protecting ourselves, on the downside and taking profits on the upside. There is an easier and better way of doing this. One problem with this is if the market rallies, comes up here and touches the limit order and fills that order, and takes our profit, it still leaves the stop order sitting down here actively out in the market. When we have to manually come in, once that happens, we have to Exit out of this position, so that it doesn't accidentally get filled when we don't want it to.
A better way of doing this is by using the OCO feature. Coming into our market order which is sitting on the screen, we can right click on the screen, or right click on the triangle. We can also right click on the handle over here, as well. It's going to give us this dialogue box. Then we're going to say add OCO. You'll notice that as I click that, it now drags two orders- a stop order below the market, and a limit order, above the market. You'll notice that they are connected by a line. That line indicates that they are connected together, so this is all one order ticket at this point.
We go ahead and we click the mouse and it sets those orders to the market. Now we can move them individually. We can slide this one up to a location that we want to protect ourselves on the downside, and we can move our limit order to a place that will take profits. Now what happens if the market rallies up and touches the limit order, and fills that limit order and locks in our profit. That limit order because it's tied to the OCO ticket, it will automatically cancel and delete out the stop order. Or vice versa- if the market turns and comes down against us, and stops us out and takes a small loss by hitting the stop loss order, it will automatically cancel and throw away and delete the limit order.