Order Types Used By Forex Traders

During the last 10 years, Forex trading has become among the most appealing business opportunities to ever hit  people's interest about the world. Day-after-day people from many walks in life are actively looking at entering the rewarding world of the currency markets due to its availability and trading characteristics.

Among the first things you will do once you determine you would like to enter and learn about the forex markets will be to select your forex broker and then download the free trading platform software from your broker website.

When you first open your trading station software, you will find that there are a number of ways to enter the market or, said in another way, there are a number of ways to place an initial order to buy or sell any currency pair.

One of these types of orders is what is known as a “Market order”; this is an order to buy or sell a currency pair at the market price considering the instant that the order is received and processed (which is usually within seconds of hitting the "OK" button on your trading platform). When a market order is placed, you are simply saying "I'll buy or sell the currency pair at whatever price it is at when my order gets processed."

There's different way to enter the market that's known as an “Entry order”; this is an order to purchase or trade a currency pair once it gets to a certain cost target; which you ought to determine by utilising your knowledge of technical and basic indicators. Theoretically  this may be any price. You may set an entry order for the low price of a period of time, or the high price of the same period of time'; it all hinges upon your intents, to sell or to buy. As an example, one customary recommendation is that you ought to always set an entry order to be the same price as the 'open price” of the period of time. When you place an “entry order” to buy, for instance, you're just saying "I would like to buy this currency pair at a given future price and if it never reaches that price, I will not purchase the pair."

Stop and Limit orders are two different ways to exit a trade, automatically (that is., without closing out your position via the click of your mouse or manually), after the trade is entered. And they are widely used as safety locks so you won't end losing everything in a bad trade. In short, you must always use stops and limits when trading the forex markets.

A “stop order” is used to stop losses. A “limit order” (recommended if you can't monitor your open trade) is used to redeem profits. Where these orders are placed, in relation to your open trade, depends on the direction of the entry order, this is; if you buy or sell.

Remember; a “stop order” is always placed below the current market value of that currency pair when you're in a long (buy) trade. And a “limit order” is always placed above the current market value of that currency pair when you are in a long (buy) trade.