3 Important Order Types In Forex Trading
To be able to trade in any walk of life, whether that be a house, a boat or forex, you must be able to ‘buy’ and/or ‘sell’ the related product. It is therefore extremely valuable to learn the different types of orders involved with buying and selling on the forex markets and how to implement them before you begin trading. Differing order types have their inherited different benefits which when learnt correctly can be used in conjunction with one another which can reap massive rewards.
It is important to note that when placing an order with a broker, whether that be a manual order, or one that you have set-up to be implemented when a certain price point is reached could be different to the price you have actually bought or sold your position for. This is due to the execution policy your broker runs, the connection between you and your broker, and the connectivity between the broker and their liquidity providers – and whether their liquidity providers can fulfil the instruction at the quoted price.
A market order is the most common order type.
A market order is the order placed when you manually click the ‘buy’ or ‘sell’ indicator on your trading platform. You may choose to place this order type when you believe it to be the best time. This is a manual order, therefore you will have to keep your eyes on the price to make sure you are doing this at the right time/price for you.
Limit Entry Orders
A limit entry is a type of order you have to manually set-up, in which the trading platform will trigger this order automatically as soon as the price point is reached.
The type of order being placed is one that will increase your profits, whether it be to sell at a higher price, or to buy at a lower price once triggered. This order can ensure
Stops & Limits Orders
This order type is similar to the one above, in the fact that it is manually set-up, and automatically triggered, which leads to the instructions.
As opposed to taking the order when taking a profit, this order is to cap a loss as the name implies. This would include selling at a lower price, but at least you don’t lose all of your equity. Or a buy limit, where you create an upper limit to buy, where again the loss of the open position is capped to the level at which you decide.