Diverse types of forex order that every trader need to know.
To learn Forex from the basic, there is no doubt that you will meet various types of orders used in the Forex market. It is extremely important for a new trader to understand every type of Forex order so that they can place the right order in the market. In this article, you will be able to know about several different kinds of Forex order.
Different Forex Order Types You Should Know
The term order here simply means how you are going to enter or exit a trade in the Forex market. When you are trading foreign exchange, you will own a lot of options at your fingertips to gain benefit of a trading opportunity, both now as well as in the future. For your information, here are some basic Forex order types used by most brokers.
• Market Order
First of all, there is market order. This is an order for your broker to purchase or sell at the finest available price. For instance, the bid price for USD/EUR is presently at 1.1240 while the ask price is at 1.1242. In case you want to purchase USD/EUR, it will be sold at the 1.1242 ask price. You just need to click ‘buy’ to execute.
• Limit Entry Order
Limit entry is an order set to either sell above the market or purchase below the market at a particular price. For instance, USD/GBP is presently trading at 1.1050 and you are likely to go short if the price arrives at 1.1070. You can either face your monitor and wait until it hits 1.1070 or simply place a sell limit order at 1.1070.
• Stop Entry Order
In contrast to limit entry, stop entry is an order set to sell below the market or buy above the market at a particular price. For instance, JPY/USD is presently trading at 1.050 and is heading upward. Since you consider that the price will carry on this direction when it hits 1.060, you can place a stop entry order at 1.060 as you believe it.
• Stop Loss Order
Stop loss order is kind of order related to a trade with the aim to prevent extra losses when the price moves against you. As a Forex trader, it is essential to set a stop loss order as risk management strategies. If you are in extended position, it is called sell stop order. If you are in short position, it is called buy stop order.
• Trailing Stop
When it comes to trailing stop, it is kind of stop loss order applied to a trade which goes as price fluctuates. For example, if you decide to short JPY/USD at 80.90, with a trailing stop of 30 pips. It means that your stop loss is originally at 81.20. When the price goes down and reaches 80.70, your trailing stop will move down to 80.90.
• Other Forex Orders
Other than the basic orders above, there are some weird Forex orders that you need to know as well. For example, there is Good Till Cancelled which refers to order to remain active until you make a decision to cancel. In this case, your broker won’t cancel your order at any time. You will be the one responsible to remember when you must cancel it.
Those are several basic orders in
Forex trading. Keep in mind that different brokers may have different types of order used within their trading platform. That’s why it is important for you to learn Forex trading order of your broker in prior before you start trading. Consider hanging around for a while in your broker’s demo account to make yourself familiar. That’s all!