Types Of Forex Orders
Different Types of Forex Orders
To Trade forex currencies you need to know about different types of forex trading orders like Buy or Sell orders, Stop Loss, Buy Limit or Sell Limit and Buy Stop or Sell Stop orders. To know more how you can place order in MetaTrader 4 trading platform continue reading article below.
Forex Stop Order Definition
Stop Orders can be used when you believe the price will continue in the same direction after a certain point. For buy orders, this would be for order levels above the current price whilst sell orders would be below the current price.
For example, let’s say that USD/CHF is currently trading at 0.8030/0.8033.
You believe that if USD/CHF goes up to 0.8060, then it is likely to rise further. Therefore, you want to enter a Buy position when the price hits this resistance level rather than trade at the current price.
You place an Entry Stop Order to buy $10,000 on USD/CHF when the price reaches 0.8060. This means that when the USD/CHF ‘ask’ price reaches 0.8063, the order will be executed. You will be automatically entered into a new Buy position of $10,000 on USD/CHF.
Forex Limit Order Definition
You can use an Entry Limit Order when you believe that the price will reverse after a certain point. For buy orders, this would be below the current price whilst sell orders would be above the current price.
For example, let’s say the AUD/USD is currently trading at 1.0937 / 1.0939.
You believe that if AUD/USD reaches 1.0965, the Australian dollar will fall in value against the US dollar. Therefore, you want to enter a Sell position when the price hits this level rather than trade at the current price.
You place a Limit Entry Order to sell AUD10,000 on AUD/USD when the price reaches 1.0965. Therefore, when the ‘bid’ of AUD/USD hits 1.0965, the order will be triggered. A new Sell trade of AUD10,000 on AUD/USD will be opened automatically.
Buy Order
It is an order given by the trader or investor to the broker to buy the specified quantity of certain security at the desired price. This fixed price is termed as the buy price. It is triggered when the current price touches the buy price.
• Open New Order form.
• Select Buy and fill in the price.
• Click OK to proceed.
Sell Order
It is an order given by the trader or investor to the broker to sell the specified quantity of certain security at the desired price. This fixed price is termed as the sell price. It is triggered when the current price touches the sell price.
• Open New Order form.
• Select Sell and fill in the price.
• Click OK to proceed.
Buy Stop Order
It is an order given by the trader or investor to the broker to buy the specified quantity of certain security at a fixed price or above the fixed price. This fixed price is termed as the stop price. It is triggered when the current price touches the buy stop price or moves through it.
• Open New Order form.
• Click on instant execution and change the type to pending order.
• Fill in the price and choose your order as buy stop order.
• Click OK to proceed.
Sell Stop Order
It is an order given by the trader or investor to the broker to sell the specified quantity of certain security at a fixed price or below the fixed price. This fixed price is termed as the stop price. It is triggered when the current price touches the sell stop price or moves through it.
• Open New Order form.
• Click on instant execution and change the type to pending order.
• Fill in the price and choose your order as sell stop order.
• Click OK to proceed.
Buy Limit Order
It is an order given by the trader or investor to the broker to purchase the specified quantity of certain security at a fixed price or below a fixed price. This fixed price is termed as the limit price.
• Open New Order form.
• Click on instant execution and change the type to pending order.
• Fill in the price and choose your order as buy limit order.
• Click OK to proceed.
Sell Limit Order
It is an order given by the trader or investor to the broker to sell the specified quantity of certain security at a fixed price or above a fixed price. This fixed price is termed as the limit price.
• Open New Order form.
• Click on instant execution and change the type to pending order.
• Fill in the price and choose your order as sell limit order.
• Click OK to proceed.
Forex Trailing Stop Loss
It is a method to change the level of stop loss automatically. This tool is more useful in the situations when too much price fluctuation is there. As soon as the profit moves more in the positive direction order level is automatically shifted at the specified level from the current price. Again if price reverses anytime then as soon as it becomes equal to the trailing stop loss, the position is closed. This is how traders manage to trade safely with the help of Trailing Stop Loss. Remember an important point if you are using the feature of trailing stop loss that trailing stop loss works at client computer only so if anyway your computer is disconnected from the Internet then trailing stop loss will not work. So if you want trailing stop loss to work perfectly then manage to don’t let your computer to disconnect from Internet.
To set trailing stop loss, follow the steps below.
1. Right click on your opened position and select Modify or Delete order.
2. Fill in the stop loss price in the next window.
3. Push the modify button and your order with stop loss is placed now.
Take Profit Order
It is a method used by the Forex traders or investors to specify the exact rate of a currency pair or the number of pips above the current price to close their opened position and take profit. The profit point where the trader or investor wants to earn profit is also termed as take profit point. This method helps the traders or investors to make maximum profit. To set take profit order, follow the steps below.
• Right click on your opened position and select Modify or Delete order.
• Fill in the take profit price in the next window.
• Push the modify button and your order with take profit is placed now.
Forex Take Limit Order
Limit orders execute only if the specified period is not expired and the exchange rate becomes equal to the specified threshold.
An order placed with a Forex Broker to buy or sell a set number of shares at a specified price or better. Because the limit order is not a market order, it may not be executed if the price set by the investor cannot be met during the period of time in which the order is left open. Limit orders also allow an investor to limit the length of time an order can be outstanding before being canceled.
While the execution of a limit order is not guaranteed, it does ensure that the investor does not pay more than he or she is willing to. Depending on the direction of the position, limit orders are sometimes referred to more specifically as a buy limit order or a sell limit order. For example, a buy limit order that stipulates the buyer is not willing to pay more than $30 per share, while a sell limit order may require the share price to be at least $30 in order for the sale to take place.
Limit orders can have specific conditions added to them. An investor may indicate that the order must be executed immediately or canceled, which is called a fill or kill (FOK) order. They may also require that all desired shares be bought or sold at the same time if the trade is to be executed, which is called an all or none order.
Limit orders typically cost more than market orders because they can be more difficult to fill. Despite this, limit orders let investors get their specified purchase or sell price. Forex Trading Limit orders are especially useful on a low-volume or highly volatile stock.