What's Difference between Market Order? - Stop Order and Limit Order
There are different types of forex trader orders which a trader can use to trade in Forex.
At the foundation of successful forex trading is making use of the correct FX trading order for its correct purpose. The most important things to remember about is forex orders: Always understand the forex orders you place and never place a FX trading order which you are not entirely knowledgeable about. Definitions of the commonly used types of forex trade orders:
Forex Market Orders and Pending Orders - Limit Order and Stop Order
Forex Market Order
Market order is the most basic type of forex order, market trading order is used to buy or sell at current request quote or bid quote price. This refers to the quoted forex price that appears on your forex trading platform.
This type of forex 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 forex trade you can buy & sell at the current forex price at a click of a button using a forex market order.
Pending Forex Trading Orders
These are forex orders used to open a new forex trade position after the market reaches a price specified by the trader.
Entry orders are used to buy or sell when price when it attains a certain price target.
When a specific forex price level is reached or broken then a forex pending order is executed.
These Pending Orders are used to enter a trade at a specified price level. It is almost impossible to monitor the forex market every second & this is why a forex order can be used by a forex trader. If you feel the forex market price may take a certain action, such as break through a specific forex price level that it has been touching but it has not been able to break, you would want to use an Forex Pending Order. Once the market crosses your specified forex price level, your pending order trade order will then be executed.
There are two types of forex pending orders - forex limit order & forex trading stop order.
Forex Limit Order
An order to buy or sell at a specific limit.
An forex limit order can be used to buy below the current forex price or sell above the current forex 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 Forex Limit Orders are placed by traders when they expect the market to bounce back after reaching the retracement forex price level at which the forex limit order was placed.
Buy Limit Order Specifies to buy at a level below the current forex trading market price
Sell Limit FX Trading Order Specifies to sell at a level above the current forex trading market price
Forex Trading Stop Order
A forex stop order is a pending order that is used to buy above the current forex price or to sell below the current forex price.
When buying, forex stop order is executed as the forex market goes up & hits the buy stop level.
When selling, forex stop order is executed as the forex market goes down & hits the sell stop level.
- Buy Stop FX Trading Order Specifies to buy at a level above the current forex market price.
- Sell Stop Forex Trading Order Specifies to sell at a level below the current forex market price.
What is the Difference between Stop Orders and Limit Orders in Forex?
How to Differentiate Between Stop Orders and Limit Orders
Stop orders are set to buy above or to sell below current market price
Limit orders are set to buy or sell at a better price after a price retracement.
It is easier to first of all remember one concept. The easier concept is that of Stop Orders - Stop Orders are set above & below the current market price.
To learn how to set up these forex pending orders read the articles:
· Setting up Forex Buy Limit Order and Sell Limit Order on MetaTrader 4
· Setting up Forex Buy Stop Order and Sell Stop Order on MetaTrader 4
What's Difference between Market Order - Stop Order and Limit Order?
