Know the Type of Order in Trading
There are many types of orders in forex, which traders use to manage their transactions. While it may vary between brokers, there are trends in some basic forex order types that all brokers accept. Knowing what it is and having a solid understanding can help a trader to enter and exit the market properly. These orders enable a bespoke trading style which can give traders peace of mind. This article will discuss the main types of forex and how they can be used in live trading.
Market Order
This market order is perhaps the most basic and is often the type of order that the very first trader finds. As the name suggests, market orders are traded on the market. That is, if a trader wants to enter the forex market immediately, the trader can execute a market order and enter at the prevailing price. Usually, scalpers and day traders rely on these orders to enter and exit the market quickly, according to their strategy.
Entry Order
The next most common type of FX order is the entry order. This order is unique in that it can be set away from the current market price. If the price is traded at a pre-selected price, the criteria for this order will be met and a new position will be created. There are many benefits of trading with these orders, including not having to be at a computer to execute positions! Usually entry orders can be used for breakouts or with other strategies that demand execution when the price crosses a certain point.
There are many types of orders in forex, which traders use to manage their transactions. While it may vary between brokers, there are trends in some basic forex order types that all brokers accept. Knowing what it is and having a solid understanding can help a trader to enter and exit the market properly. These orders enable a bespoke trading style which can give traders peace of mind. This article will discuss the main types of forex and how they can be used in live trading.
Market Order
This market order is perhaps the most basic and is often the type of order that the very first trader finds. As the name suggests, market orders are traded on the market. That is, if a trader wants to enter the forex market immediately, the trader can execute a market order and enter at the prevailing price. Usually, scalpers and day traders rely on these orders to enter and exit the market quickly, according to their strategy.
Entry Order
The next most common type of FX order is the entry order. This order is unique in that it can be set away from the current market price. If the price is traded at a pre-selected price, the criteria for this order will be met and a new position will be created. There are many benefits of trading with these orders, including not having to be at a computer to execute positions! Usually entry orders can be used for breakouts or with other strategies that demand execution when the price crosses a certain point.
Stop Order
Stop orders are also often used in forex trading, and there are also two variations:
Stop Order To Open Position
The first is a stop order to enter the market. This order can be used for breakout transactions. If the trader expects EUR/USD to continue strengthening after moving above the 1.1500 level, the trader will place a buy stop to enter at the 1.1501 level. When the market hits 1.1501, the trader's buy stop will become a market order and be filled at the next best available price.
If the trader expects EUR/USD to continue moving down if it passes the 1.1200 level, the trader will place a sell stop to enter at the 1.1199 level. When the market hits the 1.1199 level, the trader's sell stop order will become a market order and be filled at the next best available price.
Stop Order to Close Position
Traders can also use protective stop orders to close positions when the market moves a certain amount against the trader's position. If the trader has long EUR/USD positions at the 1.1500 level and wants to limit the trader's risk to 50 pips, the trader should place a protective sell stop 50 pips below the trader's entry or at the 1.1450 level.
If the trader has a short EUR/USD position at the price of 1.1400 and wants to limit the trader's risk to 50 pips, the trader will place a protective buy stop 50 pips above the trader's entry or at the 1.1450 level.
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