What's Difference between Market Order? - Stop Order and Limit Order

There are various types of trader orders that a fx trader can use to trade in Forex.

At the foundation of successful forex trading is making use of correct order for its correct purpose. The most important things to remember about is orders: Always understand the orders you place and never place a order which you're not entirely knowledgeable about. Definitions of the commonly and often used types of trade orders:

FX Market Orders & Pending Orders - Limit Order and Stop Order

FX Market Order

Market order is the most basic type of order, market order is used to buy/sell at current ask quote or bid quote market price. This refers to the quoted market price that appears in your trading platform.

This type of order is used for buying or selling according to present exchange rate quotation in Forex, the execution is instantaneous. The minute you want to enter a trade you as a trader can buy & sell at the current price at a click of the button using a market order.

Pending Trade Orders

These are trading orders used to open a new trade position after the market gets to a price specified by the trader.

Entry orders are used to buy/sell when price when it gets to a certain price target.

When a particular price level is attained or broken then a pending entry trade order is opened.

These Pending Orders are used to open a trade position at a particular price level. It is almost impossible to monitor the market every second & this is why a order can be used by a forex trader. If you feel the price may take a certain action, like break out through a specific price level that it has been touching but it has not been able to break, you'd want to use an Pending Order. Once the market crosses your specified price level, your pending order will then be executed.

There are 2 pending order types - forex limit order & fx stop order.

Forex Limit Order

An order to buy or sell at a specific limit.

An forex limit order can be used to open a buy trade below the current price or sell above the current price.

When buying, forex limit order is opened/executed when the price drops to your limit level.
When selling, forex limit order is opened/executed when the price rises to your limit level.

These Limit Orders are set by traders when they expect the market to bounce back after reaching the retracement price level that the limit order was set.

Buy Limit Specifies to open a buy trade at a point which is below the ruling market price
Sell Limit Specifies to open a sell at a point which is above the ruling market price

Forex Stop Order

A forex stop order is a pending order that is used to buy above the current price or to open a sell below the current price.

When buying, forex stop order is opened/executed as the market moves upward & hits the buy stop level.
When selling, forex stop order is opened/executed as the market moves downward & hits the sell stop level.

Buy Stop Specifies to open a buy trade at a point which is above the ruling market price.

Sell Stop Specifies to open a sell at a point which is below current price.

What is the Difference between Stop Orders and Limit Orders in Forex?

How to Differentiate Between Stop Orders & Limit Orders

Stop pending orders are set to buy above or to sell below current market price

Limit orders are set to buy/sell at better price after a price pull back.

It is easier to first of all remember one concept. The easier concept is the one of Stop Orders - Stop Orders are set above & below current price.

To learn how to place these pending orders study the tutorials:

· Setting up Buy Limit Order & Sell Limit Order in MetaTrader 4 Platform

· Setting up Buy Stop Order and Sell Stop Order in the MT4 Software

What's Difference between Market Order - Stop Order and Limit Order?

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