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

There are various types of trader orders which a 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 are not entirely knowledgeable about. Definitions of the commonly used types of trade orders:

Forex 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 or sell at current request quote or bid quote price. This refers to the quoted price which appears on your trading platform.

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

Pending Trade Orders

These are orders used to open a new trade after the market reaches 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 reached or broken then a pending order is executed.

These Pending Orders are used to open a trade 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 trader. If you feel the market price may take a certain action, such as break out through a specific price level that it has been touching but it has not been able to break, you would want to use an Pending Order. Once the market crosses your specified price level, your pending order trade order will then be executed.

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

Forex Limit Order

An order to buy/sell at a specific limit.

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

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

When selling, forex limit order is 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 Order Specifies to open buy at a level which is below the ruling market price

Sell Limit Order Specifies to open sell at a level 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 sell below the ruling price.

When buying, forex stop order is executed as the market goes up & hits the buy stop level.

When selling, forex stop order is executed as the market goes down and hits the sell stop level.

• Buy Stop Order Specifies to open buy at a level which is above the ruling market price.

• Sell Stop Order Specifies to open sell at a level which is below the ruling market price.

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

How to Differentiate Between Stop Orders & Limit Orders

Stop 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 the current market price.

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

· Setting up Buy Limit Order & Sell Limit Order on MetaTrader 4

· Setting up Buy Stop Order & Sell Stop Order on MetaTrader 4

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