Forex Orders

Its time to know how you can enter in a trade with a broker as per your need or convenience. Its called Forex Order. Two main types of orders are.

Market Order: is an order to buy or sell at the current market price. The execution of the transaction is immediate at whatever market price that holds for the time. Most of the trading is done in Market order. You give the currency pair and the amount you want to invest to the broker and he gives you the bid and ask price. Once confirmed the trading is done immediately.

Limit Order: is an order placed to buy or sell at a certain price. Say if you want to buy a particular currency pair at a particular price all you have to do is instruct the broker about the deal size and at what price would you like to execute the trading. You might also have to give the time till which you want the deal to remain active considering the fact that the market is open 24hrs.


Some other types of orders include.

GTC: That is Good Till Cancelled. That is cancelled by you. This order remains active until it is cancelled by you i.e. the trader.

GFD: Good for the day order remains active for that particular day. Usually a particular time will be quoted by the broker which would mean the end of that day.

Stop Order: it is an order to buy or sell at a certain price. The main difference between a limit order and a stop order is that stop orders are usually used to limit loss potential on a transaction whilst limit orders are used to enter the market.

Example: Trader A Buys EUR/USD 10'000 @ 0.9360, he's expecting a 60 to 70 pip move in the market but he wants to protect himself in case he has overestimated the potential strength of the Euro. He knows that 0.9330 is a support level so he places a stop loss order to sell at that level. Thus on this particular trade he limits his loss to 30 pips.

OCO: Order cancels order- is a mixture of 2 limit and/or stop orders.
Example: If the current market rate of EUR/USD is 0.9350 and trader wants to buy if the price goes to 0.9395 but he would like to sell if it drops to 0.9310. The understanding is such that at 0.9395 the trader will buy and the order to sell automatically stands cancelled.