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I'll Make it simple for you with an example and it's purpose too.
For example you bought Bitcoin at $52k using a simple limit order. Now you being a trader have set your risk/reward ratio. you think there is a chance that BTC might go upto 55k but if it falls from here below 50k your trade is more or less over because the pattern you thought it would make will not work.
So you, decide to do things in the sell order.
- 1. In the first price column, you put 55k which would be the selling price on the upside.
2. In the Second Stop column you will put 50k, as you want to sell if the price goes below 50k this would obviously be below your current price in case of a sell order.
3. In the third column you will put the limit price to sell if BTC breaks 50k.
4. In the last column obviously the qty. of the coin
Now this way all the things that you wanted to do have been done using this one single order. With a simple limit order, you cannot put a stop loss on the downside. While with a stop-loss order your amount won't be available for an Upside sell order. But this function does both things.
Things will be vice versa for a Buying OCO order. I hope it helps.
