FX Trading order is a type of offer that uses the trading platform of the broker to either open or close a transaction if the specific instruction gets satisfied. There are different kinds of orders that a trader can place in the Forex market. Knowing these orders helps you determine the one that best suits you.
Different Order Types in Forex Trading
There are order types that are most commonly used by traders while others sound rather unique.
This order is made whenever the best available price to buy or sell comes along. For instance, EUR/USD has a bid price of 1.2140 while the asking price is 1.2142. If wanting to buy this currency pair, it will be sold to the trader at 1.2142. So when you click to buy, the trading platform will automatically perform a buy order at that particular price.
However, it very important to bear in mind that the price depends on the market condition. There could be a difference between the selected price and the final price which was executed on the trading platform.
This type of order can either be placed at the ‘buy below the market’ or ‘sell above the market’. This limit order is a type of order placed when the market reached the ‘limit price’. You can place a ‘Buy Limit’ order when you buy below or at a specific price. Meanwhile, you can place the ‘Sell Limit’ order when you buy at a specified price or even a much better one.
You can use this order if you feel that the price will reverse right before hitting the specified price.
Stop Entry Order
This type of order stops the execution of the order pending a stop price. You can utilize stop orders on your trades when you want to purchase only when the price goes up until the stop price or sell it after it falls into the stop price.
You can use the “Buy Stop” order whenever you purchase at the price which is above the market price or when it triggers the market price and goes through the ‘Buy Stop’ price. Placing a ‘Sell Stop’ is also possible with Stop Entry Order. You can order to sell whenever a specific price is triggered.
Stop Loss Order
This is one of the most used orders in the market. The Stop Loss Order will automatically close out whenever the market price has reached a specific price, which can either be a profit or a loss.
The Stop Loss Order helps traders prevent from acquiring additional losses in case the market price goes against your trading plan. For long positions, it is called a ‘Sell Stop’ order. While for short positions, it is called the ‘Buy Stop’ order.
The orders above are known across the market and it is commonly used by traders. However, there are these so-called Weird FX Trading Orders that are worthy to be named.
- Good ‘Till Cancelled (GTC)
- Good for the Day (GFD)
- One-Triggers-the-Other (OTO)
These orders might sound weird but it is still important to know them just in case they come handy.