Forex is a 24-hour market, always moving whether you are sleeping. In order to avoid the risk of losing money at times when you are unable to observe the market, the broker always allows you to add more information than the purchase price, your price and the trading volume. Let’s find out what is “more” information through 8 basic types of orders when investing forex.
In forex, so as to open any position you need to place an order. An order consists of position-related information such as volume, price, price, type of order, etc. When the forex brokers receive your order, the order will be opened based on the information which is provided in that command. So now that you know what a command is, let’s come up with 8 basic types of forex commands.
1. Market order
Market orders are probably the most basic of these eight basic types of orders and are usually the first order used by a forex trader.
As the name implies, market orders are traded on the market. This means that if you want to enter the forex market immediately, you can trade a market order and enter it at the current price.
Usually, day traders and scalpers rely on market orders to enter and exit the market quickly, according to their strategy.
>> Read more: STEPS TO MAKE EFFECTIVE FOREX STRATEGY YOU MUST KNOW
2. Limit order
There are two types of limit orders related to forex trading:
2.1 Limited order to open buy / sell deal
The first is a limit entry order to get a better entry price. If EUR / USD is trading at 1.1294 and you think it will trade to 1.1200 before rising, you will place a limit order to buy at 1.1200.
If EUR / USD is trading at 1.12939 and you think it will rise to 1.1300 before the sale is down, you will place a limit order to sell 1.1300. When using the limit order, you will only be able to fill in the price you specified or better.
2.2 Limit order to close buy / sell deal
You can also use the limit order to close a trade when the market moves a specified amount in your favor. If you have bought EUR / USD at 1.1300 and want to exit when your trade is profitable of 100 pips, you will place a limit to sell 100 pips above your entry level or at 1.1400.
If you short-sold EUR / USD at 1.1300 and want to exit when your trade is profitable of 100 pips, you will place a buy order limit of 100 pips below your entry level or at 1,1200.
3. Stop order
Stop orders are also commonly used in forex trading and come in two variants:
3.1 Stop order to open a trade
The first is a stop order to enter the market. These orders can be used for groundbreaking transactions.
If you think EUR / USD will increase further after moving above 1.1500, you will place a buy stop to enter the market at 1.1501. When the market is printed 1.1501, your buying stop becomes the market order and is filled in the next best price.
If you think EUR / USD will continue to move down if it is trading below the level of 1.1200, you will set your sell stop to enter the market at 1.1199. When the market is 1.1199, your sell stop will become the market order and be filled in the next best price.
3.2 Lệnh dừng để đóng giao dịch
You can also use a protective stop order to close a trade when the market moves a specified amount of money against your position. If you have bought EUR / USD at 1.1500 and want to limit your risk to 50 pips, you will place your protective sell stop below 50 pips below your entry level or at 1.1450.
If you were to sell EUR / USD at 1.1400 and want to limit your risk to 50 pips, you would place your protective buy stop at 50 pips from your entry or at 1.1450.
4. Stop loss order
A stop loss order is a type of order linked to a trade in order to prevent further loss if the market goes against your expectations.
If you are in a buy position, it is a STOP sell order. If you are in a sell position, it is a STOP buy order.
The stop loss order remains in effect until the position is liquidated or you cancel the stop loss order.
5. Take Profit Order – T/P
This is a variation of a limit order. The take profit order will automatically close your position when the target price is reached.
Note that you may only use take profit orders in other types of orders, such as market orders. For example, you place a GBP / USD market order at $ 1,2500, and you set a take profit of $ 1,2600. The market order will then be activated and maintained until the price reaches 1.2600. When the price reaches 1.2600, the take profit order is executed and automatically close the position with profit of 100 pips.
6. Good’Til Cancel Oder – GTC
Orders valid until cancellation (GTC) are essentially the same as limit orders. True to its name, a GTC order will be valid until the order is completed, the customer canceled or expired.
Non-refundable like its name, GTC has a deadline. The duration of a GTC order is usually 30-90 days after the order was entered.
Through GTC orders, investors who do not regularly monitor the market can place buy or sell orders at specific prices and hold them for several weeks. If the market price hits the price of the GTC order before it expires, the trade will execute. Investors can also place a GTC order as a stop order, place a sell order at a price lower than the market price, and buy orders above the market price to limit losses.
7. Day order
An order of the day used to execute a trade at a specific price expires at the end of the trading day if it is not completed. An order for the day may be an order to buy or sell, but its duration is limited to the day of trading.
Intraday orders are usually placed within the default time frame on trading platforms. Therefore, investors must specify a different time frame when the order expires if they want to adjust or it will automatically be an order of the day.
8. One Cancels the Other Oder – OCO
The option order (OCO) is a combination of the limit and stop orders mentioned above. Once the target of the limit command or stop order target is reached, the order will automatically be canceled.
Experienced investors use OCO orders to minimize risks and participate in the market.
Investors can use OCO orders to trade withdrawals and breakouts. If you want to trade above resistance or below support, you can place an OCO order using buy and sell stops to enter the forex market.
Synthesized by top4forexbrokers.net