1.23 Types of Orders in Forex Trading

 

An ‘order’ is exactly that – an instruction on how to execute a trade. The different types of orders that are available in the Forex market are detailed in the table given below: 

 

Forex Order Type

Explanation

Market Order

An order to buy or sell at the prevailing market price to buy or sell immediately.

 

Limit Entry Order

Advance orders to enter the market at a better expected future price. When buying a currency pair, the limit entry will be placed below the current market price if you think that before moving up the price may see some downward correction. When placing an entry order to sell, the limit entry order will be placed above the current market price.

 

Stop Entry Order

Orders to enter the market at a less favorable price. When buying a currency pair, the stop entry will be placed above the current market price. When placing an entry order to sell, the stop entry order will be placed below the current market price.

 

Stop Loss Order

An order linked to an open position and to be executed at a certain price, this being the extent of loss acceptable to you.

 

Trailing Stop

A sell trailing stop order sets the stop price at a fixed amount below the market price with an attached "trailing" amount. As the market price rises, the stop price rises by the trail amount, but if the stock price falls, the stop loss price doesn't change, and a market order is submitted when the stop price is hit. This technique is designed to allow you to specify a limit on the maximum possible loss, without setting a limit on the maximum possible gain. "Buy" trailing stop orders are the mirror image of sell trailing stop orders, and are most appropriate for use in falling markets.

 

Good Till Cancelled (GTC)

An order that stays in the system until you cancel it or is executed.

 

Good for the Day (GFD)

An order that is valid only until the end of the trading day, usually 5:00 pm EST for USA and similarly for day's end of trading time for respective trading sessions.

 

One-Cancels-the-Other (OCO)

An order that allows you to place both a stop and a limit order so that if either the stop order or the limit order price is hit a position is opened and the opposing order is automatically canceled by the platform.

 

One-Triggers-the-Other (OTO)

This is a mix of two orders, a primary and a secondary order - if the primary order executes, the secondary order automatically triggers. This is useful if you want to have a stop loss (the secondary) in place as soon as a position is entered (the primary).

 

Crucial points to note here:

 

  • You should be completely familiar with the broker’s ordering system.

 

  • All brokers do not offer all the above orders, so check what is available first.

 

  • Keep your orders simple and easy to control.

 

 
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  • Types of Orders in Forex Trading
 
 

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