How to Determine Buy and Sell Stops on News

In forex trading, there are many terms that may be foreign to the ears of novice traders. Some examples include buy stop, sell stop, buy limit, and sell limit. These four terms relate to the different types of pending orders that can be applied to the trading platform, if the trader does not want the order to be executed at the current price.

Buy Stop and Sell Stop

Included in the group of orders of type 'stop order', buy orders are applied if the trader wants to open a long position above the current market price. Meanwhile, a sell order is placed if the trader wants to open a position below the current market price. Buy stop and sell stop will not be active if the price has not reached the level that the trader specified.

For the setting method, the buy stop and sell stop order forms are similar to the usual market order forms. However, when filling out the form. the trader must fill in the 'type' column with 'pending order' instead of 'instant execution'. Then determine the type of pending order as 'buy stop' or 'sell stop' depending on the projected direction of price movement. Input the desired trading volume (lots), as well as stop loss and take profit levels. Finally, determine the expiration period of the stop order.

Important Things Traders Need to Pay Attention to

Observe the difference between applying buy stop, sell stop, buy limit, and sell limit. If necessary, practice using it on a demo account first. Before using it for real trading in real accounts. If they are confused, it is not impossible that the trader's trading results will be chaotic. Many novice traders who when they try to use it can't make a profit, but instead stagnate.

In addition, don't forget to always specify an expiration date or cancel orders that are no longer active, because the default option is GTC. If the order with the GTC label is not canceled, it can be triggered at any time when you don't want it. These various types of orders are provided in the forex trading platform with the aim of making it easier for traders. However, if used without adequate knowledge and experience, it can result in blunders.


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