TYPES OF ORDER IN FOREX MARKET
Understanding order types in forex is as important as understanding your temperament, because your temperament will always determine how you behave or the way you do things. So let get started.
There are quite a few order types that can be placed in the forex market. These are as follows.
· Market order
· Limit order
· Stop entry
· Stop loss order
· Trailing stop order
· Good till cancelled order
· Good for the day order
· One cancelled the other
· One trigger the order
A market order is an order to buy or sell at the present market price. For example suppose the bid price for usd/jpy is currently going at 1.1287 and the ask price is going at 1.1289 , if you place a market order to buy usd/jpy, then it would be sold to you at the current ask price at 1.1289.
You would click on they buy button, your trading platform would instantly execute a buy order at that exact price.
LIMIT ENTRY ORDER
A limit entry order is a type of order you use when you want to buy below a certain market price or sell above a certain market price.
For example suppose the usd/jpy pair is currently trading at 1.1287 and you want to go long( buy) when the price drop to 1.1200 in that case you have two option to achieve your aim. Either you can sit in front of your trading console and wait for it to hit 1.1200 (at which point you have to place a buy market order) or as an alternative, you can set a buy limit order at 1.1200 (now you can go where ever you may wish, your buy order will automatically executed if the price hits 1.1200). In the same way if you want to go short (sell) the same usd/jpy at 1.1289, you can place a sell limit order at 1.1289 so that the system automatically executes your plan sell order once the price reaches 1.1289.
STOP ENTRY ORDER
A stop entry order is an order placed to buy above the market or sell below the market at a certain price. For example suppose the EUR/USD pair currently trading at 1.9180 and heading upward and you think that the price will continue in the upward direction, if it hits the price of 1.9190.
Here you have two options to do this.
The first option is to sit in front of the trading terminal and buy the pair when you the price reaches 1.9190 and the second option is to set a buy stop order at 1.9190.in the second option the system will automatically execute the buy order if the price reaches 1.9190.In the same way if you think that the price will continue to drop if the price hits 1.9170, the you place a sell stop order at a price of 1.9170.In that case, if the price hits 1.9170 then a sell order is automatically placed by the trading system on behalf of you.
STOP LOSS ORDER
A stop loss order is type of order that is placed in order to prevent additional losses in a trade if the price goes against you. Stop loss orders are always placed in opposite direction of you current trade.
TRAILING STOP ORDER OR TRAILING STOP LOSS ORDER
A trailing stop order or trailing stop-loss order is type of stop loss order attached to a trade that moves as price fluctuates. Let say that you’ve decided to long (buy), usd/cad at 1.2320, with a trailing stop of 20 pips. This means that originally your stop loss would be at 1.2300, it will move up to 20 pips for every upward movement of the currency exchange if the price goes up and hits 1.2340, your trailing stop loss would move up to 1.2320 or ( breakeven)
GOOD TILL CANCELED ORDER ( GTC)
A good till cancelled orders are those order that remain active in the market until you decide to cancel them.
GOOD FOR THE DAY ORDER
A good for the day order remain active in the market until the end of the day.