The term “order” refers to how you are going to enter or exit a trade. Here we talk about the different types of orders that can be placed in the forex market. Make sure you know what types of orders your broker accepts. Different brokers accept different types of orders.
There are some types of orders in Basic Trading that all brokers they provide and a few others that sound weird. The basic ones are the following:
A market order is an order to buy or sell at the current market price. For example, the EUR/USD is currently trading at 1.2140. If you want to buy at that exact price, you will click buy and your trading platform will instantly execute a buy order at that exact price. If you ever bought from the Amazon.com store, it’s like ordering from their 1-Click system. You like the current price, click once and it’s yours.
A limit order is an order placed to buy or sell at a specified price.. The order basically contains two variables, price and duration. For example, the EUR/USD is currently trading at 1.2050. You want to go long if the price reaches 1.2070. You can sit in front of your monitor and wait for 1.2070 to arrive (the price at which you would click buy with a market order), or you can set a limit to buy at 1.2070 (then you could walk away from your computer to attend your dance class). . If the price rises to 1.2070, your trading platform will automatically execute a buy order at that exact price. You specify the price at which you want to buy/sell a certain currency pairas well as specify how long you want the order to remain active (GTC or GFD).
Stop Loss Order (stop loss)
A stop loss order is a limit order linked to an open position, in order to prevent losses. additional, if the price goes against you. A stop loss order remains in place until the position is closed or is canceled outright. For example, you were long (buy) EUR/USD at 1.2230. To limit your maximum loss, you set a stop loss at 1.2200. This means that if you were wrong and the EUR/USD fell to 1.2200 instead of rising, your trading platform would automatically execute a sell order at 1.2200 and close your position at a 30 pip loss. Stop loss orders are very useful if you don’t want to be in front of your monitor all day worrying about losing all your money.. From this, you simply set a stop loss order on any of the open positions so you don’t have to worry.
Take profit order (take benefits)
A take profit order it is an order to ensure the profits achieved. Suppose the Euro, taking the example above, goes up instead of down, we place a take profit order at 1.4990 because we think it will not go higher than that and it will be its maximum. When the price reaches 1.4990, the position will automatically be closed and profit will be taken.
Basic trading order types (market, limit, stop loss, take profit) are generally the ones that every trader will use most of the time. Make sure you fully understand and are comfortable with your broker executing entry orders in a trade.