Types of Forex Orders: Everything You Need to Know!
Article 7 from 8
All traders got one thing in common: time management issues. Some of us have all the time in the world, while others are squeezing trading moments between coffee break to trade. This is why understanding different forex orders is important to choose when you enter the market.
So, let’s explore the different types of forex orders that will level up your trading game.
Types of Forex Orders You Need to Know
1. Market Order
This is the most basic among all the types of forex orders. This order is executed immediately at the current market price. When you’re in a hurry to execute a trade, the market order is your go-to move. With this order, you’re telling your broker, “Hey, get me in or out of this trade ASAP at the current market price!” It’s quick, simple, and perfect for those moments when every second counts.
2. Limit Order
With this order, you’re specifying a price at which you want to buy or sell a currency pair. You set your boundaries, and when the market reaches your desired price, your order is executed automatically. There are two types of limit orders:
- Buy Limit: You want to buy a currency pair, but at a price lower than the current market price. So, you set a limit order below the current market price and wait for the market to come to you.
- Sell Limit: You’re ready to sell a currency pair, but only if the price goes higher than the current market price. You set a limit order above the market price and patiently wait for the opportune moment to strike.
3. Stop Order
The stop order is like having a safety net in place. It helps you manage risk and protects you from potential losses. There are two types of stop orders:
- Buy Stop: You’re waiting for a currency pair’s price to surpass a certain level before jumping into the action. So, you set a buy stop order above the current market price. Once the market reaches that level, your order is triggered, and you’re in the game.
- Sell Stop: You’re watching a currency pair, and you want to sell it if the price drops below a specific level. You set a sell stop order below the current market price, and if the market reaches that point, your order is activated.
4. Stop Limit Order
A stop-limit order combines the features of a stop order and a limit order. When the market reaches a specific price (the stop price), the order is triggered, and it becomes a limit order to buy or sell at a specified limit price or better. This type of order helps you manage both the activation price and the execution price of your trade.
5. Trailing Stop Order
A trailing stop order is like having a loyal companion by your side, watching your back and protecting your profits. It is an order that adjusts the stop price as the market moves in your favor. If the market price moves in the desired direction, the trailing stop price trails (or follows) the market price at a certain distance. However, if the market price reverses and reaches the trailing stop price, the order is triggered, and your trade is closed with the accumulated profit.
6. Good Till Cancelled (GTC) Order
A GTC order is the “set it and forget it” type of order. When you place a GTC order, it remains active until it is executed or manually canceled by you. It allows you to enter the market at a specific price or execute a trade at a certain condition, and the order stays open until it is fulfilled or you decide to cancel it. It is particularly useful for traders who want to keep their orders active for an extended period.
7. One Cancels Other (OCO) Order
An OCO order is perfect for those who can’t make up their minds or want to cover multiple scenarios simultaneously. It allows you to place two orders simultaneously: a primary order and a secondary order. If one of the orders is executed, the other order is automatically canceled. It enables you to set both a take profit level and a stop loss level at the same time, so that whichever level is reached first triggers the corresponding order while canceling the other.
With these types of forex orders in your arsenal, you now have a comprehensive understanding of the various tools available to manage your trades effectively. Each order type serves a specific purpose and can be utilized based on your trading strategy and goals. Happy trading!
Boost Your Earning.