The term “order” means how you will enter or exit the transaction. Below we will describe the types of forex orders that each trader can place during trading in the foreign exchange market. I want to draw your attention to the fact that before you start trading, make sure that you know all the types of orders that are used your broker, because all the different brokers can use different orders.
Types of Forex Orders
A market order is an order to buy or sell, exposing which the trader hopes to close the deal at the most favorable price on the market at the moment. It was used by all brokers.
To better understand what it is, give an example. Let’s say the bid price for a pair of EUR / USD at a particular time is 1.2130, and ask – 1.2133. If you now wanted to buy EUR / USD on the market, you would have made a deal at a price of 1.2133. By clicking the “buy” button, your trading platform will instantly execute a buy order at exactly this price.
Limit Entry Order
Limit Entry Order – this is a warrant to buy below the market or for sale above the market at a specific price.
Again, let’s see an example using the most traded pair in the world EUR / USD. Let’s say that now the pair is trading at a price of 1.2050. If you want to close the transaction SOLD when the price reaches 1.2070, you can wait until it closes, and when it comes, click close the order. Or you can set a sales limit of 1,2070. In this case, if the price rises to 1.2070, your real price will be automatically sold for the best available price.
Stop-Entry Order – this is an order, directly opposite the previous one, and it is intended for buying above the market or selling below the market at a certain price.
For example, EUR / USD currently stands at 1.5060 and moves up. You think that the price will continue to grow, and you want to close the buy order at 1.5070. As in the previous case, you can wait, and set a stop order at 1.5070, and the trading platform will close the order as soon as a suitable situation is created in the market.
Stop-Loss order is a kind of limiter that allows you not to lose money if something goes wrong in the market. This order is put up by almost all traders, only experienced currency players do not use it. Having set the stop-loss, the warrant remains active until the position is closed or you do not cancel the stop-loss order.
Suppose you open a deal to buy a pair of EUR / USD at a price of 1.2240. To prevent an undesirable loss, you set a stop loss at point 1.2200. This means that if you still made a mistake and the price dropped to the level of 1.2200 instead of moving up, it will automatically be sold at a price of 1.2200. As a result, the deal will be closed and you will not lose 40 points.
Stop-Losses are good helpers of traders. Instead of sitting constantly in front of the monitor and being afraid to lose money, if the price goes in the wrong direction, you can set a stop order for all open positions and calmly deal with other matters.
Trailing stop is another useful order that protects you from losses. This is a type of stop-loss, set for a particular transaction, and which moves at a price.
Let’s say you decided to open a deal to sell USD / JPY at a price of 90.80, while setting a trailing stop for 20 points (that means, initially your stop loss is 91.00). If the price drops to 90.60, the trailing stop will move to the level of 90.80. If the price of USD / JPY reaches 90.40, the stop-warrant will move to 90.60 (or fix a profit of 20 points). The deal will remain open until the market price reaches the final stop-price.
These are the main types of orders that all traders use. We believe that this is the basic information, it should be known to everyone who trades in the Forex market. Once again, recall that before you begin to cooperate with a particular broker, choose that you know all the types of orders that use this company. In comparison, practice on a demo account.