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

Forex traders have access to several distinct types of orders they can use for executing trades in the Forex market.

The cornerstone of successful forex trading lies in utilizing the correct order for its intended purpose. It is crucial to remember the following about orders: Always comprehend the orders you place and refrain from executing an order that you do not fully understand. Below are definitions of the commonly used types of orders:

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

FX Market Order

Market orders are the simplest form of orders used in trading. They enable buying or selling at the current ask or bid market price quoted on your trading platform.

This kind of order is used to buy or sell at the current exchange rate in Forex, and it happens right away. When you want to make a trade, you can quickly buy or sell at the current price by clicking a button using a market order.

Pending Trade Orders

These are specialized orders utilized by traders to initiate a new trade position once the market reaches a predetermined price point.

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 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.

A forex limit order allows you to initiate a buy trade below the current price or a sell trade above it.

When initiating a buy order using a forex limit order, it gets opened or executed only when the price descends to the specified limit level.
When selling, forex limit order is opened/executed when the price rises to your limit level.

Traders set Limit Orders when they expect the market to bounce back after hitting a retracement level.

A Buy Limit order is defined as an instruction to open a purchase trade at a specific level situated below the current market price.
A Sell Limit order is defined as an instruction to execute a sale at a specific position that is above the current prevailing price.

Forex Stop Order

A forex stop order constitutes a contingent instruction utilized either to purchase assets at a level above the current prevailing price or to sell below the current price.

When a buy stop order is placed, it is activated or executed as the market advances upwards and reaches the specified buy stop level.
During a sell operation, a forex stop order is triggered or opened as the market declines and reaches the predefined sell stop level.

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

Sell Stop Specifies to open/execute 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.

Here's an easy concept to start with: Stop Orders. You set them above or below the current price to manage your trades.

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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