Forex Trading Order Types
Forex brokers offer many different Forex Trading Order Types. Many brokers offer the following orders:
- Market Order
- Limit Order
- Take Profit Order
- Stop Loss Order
- Trailing Stop Order
In fact, this is your business style, which sets the order for your needs.
– “Market order” is executed as soon as it is ordered. Market orders are priced based on current market conditions and market prices.
– The “market order” immediately becomes an open position and is subject to market fluctuations.
– That is, if the rate changes against you, the value of your position decreases, which, of course, has not materialized.
– If you close your position, this loss is realized and your account balance will be updated based on the modified amount.
Due to the dynamic nature of Forex, the run-time price may not be the same as the last one seen on the trading platform, called Slippage. Sometimes Slippey works in your favor and sometimes at your disadvantage.
– Orders are limited to purchasing or selling a pair of currencies, but when specific terms are included in the original instructions.
– This order is not expected to be suspended until such conditions are fulfilled and does not affect the account balance and margin calculation.
– The most commonly used oversaw is to create an owl to be automatically triggered if the exchange rate reaches a certain level.
– For example, if you think EUR / GBP is growing, you can set a limited purchase order that is slightly higher than the market rate. If the price is as high as you anticipate, the purchase order will automatically be executed without any other activity on your part.
Limited currencies waiting to have no effect on your account balance and can be canceled at any time without any consequences; however, if the terms of the limited order are provided, the order will be executed and become an active trading order. .
Take Profit Order
– When the exchange rate reaches the specified limit, the marginal liens automatically closes the open orders.
– The margin is used to limit profit, when you do not have the opportunity to monitor your open positions.
– For example, if you bought USD / JPY at 109.58 and you want to get a profit when you receive a rate of 110.00, you can set this rate as your profit margin. If the sales price reaches 110.00, the open position is automatically closed and your profit will remain.
– Your transaction is closed according to the current market rate. In a rapidly changing market, there may be differences in market rates and the rate you set for profit margins.
Stop Loss Order
– Loss margin orders, like the margin, are a defense mechanism that you can use to prevent further losses (such as avoidance of margin call).
– When the exchange rate changes against you and reaches the level you set, the losing margin automatically closes the open position.
– For example, if you bought USD / JPY at 109.58, you can set your loss at 107.00, and if the sales price falls to this level, the deal closes automatically and prevents you from losing.
– Keep in mind that the losing margin is only limiting your loss, but it does not completely prevent it.
– Your transaction closes based on the current market rate. In a rapidly changing market, the market rate and the rate you set for a loss is likely to vary.
– At the start of transactions on the first working day (Monday), if your losing margin starts, your transaction will run based on the current market rate, which may be lower than your loss and lead to further losses. .
– It is in your best interest to set a deadline for your open positions. Consider this instruction as your primary form of insurance.
Traders use the term “stopped-out” to describe the closing of a position by a losing margin.
Trailing Stop Order
– The trailing stop order, such as the losing margin, can be used to limit the loss and avoid Marginal Cal.
– If the market moves in an unfavorable direction, the Trailing Stop closes as much as your trade stop loss at the specified interval.
The main feature of the Trailing Stop is that, as long as the market price moves in a favorable direction, the set price follows the market price at a certain distance.
– This increases the value of your transaction and reduces the probability of a loss.
– For example, if you set a purchase position, the set price will go up at the same time as the market price and remain unchanged if the market price declines. If you set a sales position, the set price will go down at the same time as the market price and will not change if the market price rises.