I wrote about how you can use stop loss in spot trading and i received multiple requests that "Can we use both stop loss and take profit in spot trading" ?
Yes you can and here is how
Binance has an OCO feature that you can use to place both stop-loss and take profit for your trade.
Before we discuss the steps how you can do it let me tell you what OCO is.
What is OCO?
An OCO (One-Cancels-the-Other) order on Binance allows you to place two orders simultaneously—a stop-limit order and a limit order. The moment one of the orders is triggered, the other one is automatically canceled.
For example, you can use OCO when you're unsure of the market's direction but want to manage both potential upside and downside:
- Limit Order: You set a sell limit price above the current market price to sell when the price rises.
- Stop-Limit Order: You set a stop price below the current market price to sell if the price falls to prevent further losses.
It's a useful tool for managing risk and automating trading strategies.
Now let's learn how you can do it.
STEP 1:
To set up a take profit and stop loss on your trade you need to have a coin in your bag. Let's say you have some $DOGS tokens and you want to set take profit and stoploss on it.
Your first step is go to the sell side and then tap on Limit option.
STEP 2:
Your step 2 will be select OCO from that page.
STEP 3:
You will see this page and this will help you to setup your take profit and stop loss.
Limit tab: This will help you to set up your take profit price and it should be higher than your buy price. Lets say you bought DOGS token at $0.001242 or you bought $BTC at $58k and you want to take profit on your trade at $0.0015 for Dogs trade. You simply add $0.0015 in the limit tab.
Then comes STOP and Limit tab will help you to set up your stoploss price and it will be lower than your entry price to prevent from extra loss.
- Stop: This is the trigger price. Once the price of the asset reaches this level, the order is activated.
- Limit: This is the price at which the order is placed after the stop price is triggered.
For example, if you set a stop price of $100 and a limit price of $98, once the price drops to $100, a sell limit order will be placed at $98.
Setup your price where you want to put the stop-loss for your trade. I usually keep both stop and limit price same.
In Dogs example we bought it at $0.00124 and let's you want to set a stop loss at $0.0011, you will simply add the value in Stop and limit tab and then press the sell button.
Once you add the values then you simply press/tap the sell button and your take profit and stop loss order will be placed.
This is how you can use OCO feature, It is so important to keep your trades safe. Leaving your positions open to face big drawdowns can never be a good idea.
Stay Safe and Keep Learning
