Order Types

The term order it means how you are going to enter or exit a trade. There are some types of basic orders that all brokers provide and they are the following:

· Market order:

a market order it is an order to buy or sell at the current market price. For example, if the EUR/USD is currently at 1.2140. If we want to buy at that exact price, we click buy and our broker will instantly execute a buy order at that exact price.

Limit order:

A limit order is an order that we will place to buy or sell at a certain price. For example, if the EUR/USD is currently trading at 1.2050. But we don’t want to buy now but when the price reaches 1.2070.

If the price rises to 1.2070, our broker will automatically execute a buy order at that exact price. We specify the price at which we want to buy/sell a given currency pair.

· Order to stop losses (Stop loss order).

A stop loss order is a limit order linked to an open position, in order to prevent losses if the price goes against us. A stop loss order remains in effect until the position is closed or is canceled outright.

For example, if we go long (buy) the EUR/USD at 1.2230. To limit our maximum loss, we set a stop loss at 1.2200. This means that if our analysis is wrong and the EUR/USD falls to 1.2200 instead of rising, our broker would automatically close our position with a 30 pip loss.

Stop loss orders are very useful if we do not want to be in front of our monitor all day worrying about losing all our money.

Take profit order:

A take profit order is an order to secure the profits achieved. For example, Suppose the Euro, taking the example above, goes up instead of going down, we place a take profit order at 1.4990 because we think it will not go higher and it will be its maximum. When the price reaches 1.4990, the position will automatically be closed and profit will be taken.

Sounds interesting to you, right? Keep learning with DTP with upcoming articles on our Blog.

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