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Trading Order Types PDF Print E-mail
A trader has at his disposal different types of orders to make FOREX trades. A clear understanding of each type of order is necessary to be a successful FOREX trader. “Market order”; this is an order to buy or sell a currency pair at the market price the instant that the order is received and processed.

Basic Order Types

  • Market Order: A market order is an order to buy or sell a currency at the current market price. The advantage of a market order is you are almost always guaranteed your order will be executed.
    The disadvantage is the price you pay when your order is executed may not always be the price you obtained from a real-time quote service or were quoted by your broker.
  • Limit Order: is an order to buy or sell at a certain limit. Traders use it to buy currency below the market price or sell currency above the market price. When buying, your order is executed when the market falls to your limit order price. When selling, your order is executed when the market rises to your limit order price.
    The advantage is that there is no slippage with limit orders.
  • Stop Order: is an order to buy above the market or to sell below the market. They are most commonly used as stop-loss orders to limit losses if the market moves opposed to what the trader expected. A stop-loss order will sell the currency if the market falls below the point set by the trader.
Sorceress Sounding Order Types

  • GTC (Good 'til canceled)
GTC order is an order to buy or sell a security at a specific or limit price that lasts until the order is completed or cancelled. A GTC order will not be executed until the limit price has been reached, regardless of how many days or weeks it might take.

  • GFD (Good For The Day)
GFD is an order which is valid until the close of the day for which it was placed and canceled at the end of that day if not executed. Example: The price of EUR/USD is 1.2040. You want to either buy at 1.2095 over the resistance level in anticipation of a breakout or initiate a selling position if the price falls below 1.1985. The understanding is that if 1.2095 is reached, you will buy order will be triggered and the 1.1985 sell order will be automatically canceled.

  • OCO (Order Cancels Others)

OCO order is used when placing a limit order and a stop-loss order at the same time. If either order is executed the other is cancelled, allowing the trader to make a transaction without monitoring the market. If the market falls, the stop-loss order will be executed, but if the market rises to the level of the limit order, the currency will be sold at a profit.

Epitome

The basic order types are the most used by traders. Unless you are a timeworn trader, you won't get fancy or design a system of trading requiring a large number of orders sandwiched in the market at all times! But first, stick with the basic stuff.
MAKE SURE that you fully understand and are at ease with your broker’s order entry system before executing a trade.
DO NOT MAKE a trade with real money until you have a surplus high comfort level with the trading platform and order entry system.
 
 
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