There are different types of orders which a trader can use to trade in Forex.
At the foundation of successful trading is making use of the correct order for its correct purpose. The most important things to remember about is this: Always understand the orders you place. Never place an one which you are not entirely knowledgeable about. Given below are the some basic definitions of the commonly used types are:
This is the most basic type, this is used to buy or sell at the current ask or bid quote. This refers to the quoted price that appears on your trading platform.
This type is used for buying or selling according to the present exchange rate quotation in Foreign Exchange, the execution is instant. The minute you want to enter a position you can buy and sell the currency at a click of a button using a market order.
These are used to open a new position after the market reaches a price specified by the trader.
Used to buy or sell a currency pair when it attains a certain price target.
When a specific level is reached or broken then an entry order is executed.
These are used to enter a trade at a specified level. It is almost impossible to monitor the market every second and this is why an entry order can be handy. If you feel the market may take a certain action, such as break through a level that it has been touching but it has not been able to break, you would want to use an Entry Limit. Once the market crosses your specified level, your trade is executed.
There are two types - limit and stop entry.
These are also known as pending orders.
An order to buy or sell at a certain limit.
A limit can be used to buy below the current price or sell above the current price.
When buying, it is executed when the price falls to your limit level.
When selling, it is executed when the price rises to your limit level.
These are placed by traders when they expect the market to bounce back after reaching the level at which the entry limit was placed.
- Buy Limit
Specifies to buy at a level below the current market price
- Sell Limit
Specifies to sell at a level above the current market price
An order to buy above the current price or to sell below the current price.
When buying, it is executed as the market goes up and hits the buy stop level.
When selling, it is executed as the market goes down and hits the sell stop level.
- Buy Stop
Specifies to buy at a level above the current market price.
- Sell Stop
Specifies to sell at a level below the current market price.