One-Cancels-the-Other (OCO)
Whenever entering the market, exiting the market at some
future time is required. An OCO order is a
procedure that means "one-cancels-the-other." Upon
entering the market, place a protective Stop Loss
Order and establish a projected profit target. That
projected profit target can be your Limit Order.
If you simultaneously place both Limit and Stop Loss Orders
when you enter the market, you can OCO
them and walk away from your computer. What does that mean?
At some future point in time, either
your Stop Order or Limit Order will automatically cancel
your opposing order. If the trader is sure about
a trade, they can execute an OCO order and walk away from
the trade. The trading software will then
manage the trade.
Cancel/Replace Orders
A Cancel/Replace Order is a procedure and not an Entry or
Exit Order. By definition, it is when the trader
cancels an existing open order and replaces it with a new
order. A Cancel/Replace order is primarily a
strategy of trading and predominately used after one has
taken a position in the market and wants to
stay in the market locking in profit. For example, you buy
Swiss at 1.410. Your protective Stop Loss Order
is 1.390. The market moves in the direction you projected.
Now, you want to reduce your potential loss.
So, cancel your Stop Order at 1.390 and replace it to 1.410
where you got in. You are now in a trade with
no risk! As the market moves further North, in your
direction, you want to lock in more profit. You can
cancel your 1.410 Stop Loss Order and replace it with a new
1.440 Stop Loss Order. You have captured
. You are in an
all-win, no-risk trade. Keep canceling and replacing your Stop until you are
finally
stopped-out. This is discussed separately under
"Protective Stops" in the Ultimate Traders Package on
Demand.
..................Remember................
Sellers are ASKing for a high price
Buyers are BIDding at a lower price
Trading is an auction
Slippage occurs with most Market Orders
The difference between the ASK and the BID price is the SPREAD.
Thanks for being with us.
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