Don’t you want to place an order in Forex Market? What are your Orders?
After covering the introduction and basics of forex trading, we are now entering to trade in the forex market. The word “Order”
means that we create a request to entry or exit in the trading market. It’s just the same like if we want anything in the cafe we give the order to the waiter and then our request is fulfilled. In Forex Market, there are many types of order available for entering and exiting positions. We can easily distinguish them in three major sections. They are as following
I. Market Order
II. Pending Orders
III. Exotic and Strange Orders
We will now see the complete description of these different orders and also how to use these orders?
I. Market Orders
A Marker order means an order at the “Market Price”. This is the most popular and simplest type of order used in forex trading. The market order means that we desire to buy or sell the currency pair at the current market price. It’s like going to a shop and buying a product at the price displayed without any type of bargaining or discounts. The only difference between these two is that in a shop we are buying a product and in forex market we are buying or selling a currency. As soon as we enter the market by such market order, our trade position becomes live in the forex market and is subjected to the fluctuations of the market.
II. Pending Orders
There are 7 types of pending orders and these are the type of orders which are very simple and provide all the basic needs which a trader may require for their trading strategy. Mostly all experienced trades make use of all these orders in their day to day trading activities. The list of all 7 pending orders is as following
1. Take Profit Order –
I love this order because it converts the unrealized profits into hard cash and fills our pockets with the real money. Take Profit Order is the order which helps us in giving instructions to our forex broker that our open position should be closed if our pre-determined price level is reached and the unrealized profits becomes locked profits.
2. Stop Loss Order –
I do not love this order, but instead I like it very much because this stop loss order helps in maintaining the trading capital and also helps in following risk management. Stop Loss Order is the order which helps us in giving instructions to our forex broker that our open position should be closed if the market goes against our position at a predetermined price level. This stop loss order helps us in overcoming fear and accepts the small loss before it converts into a disaster. By always including this stop loss order in our forex trading strategy, we are always available to trade another fresh trade with a fresh market point of view.
3. Buy Limit Order –
Many times we feel that the current market price for a particular currency pair is a little more as per our speculation and/or our chart analysis and in order for us to enter in an open position, in that particular currency pair, we expect a bargain in price this buy limit order helps us in entering the market at our pre-desired price level. In simple language, we are opening an order for buying a position at a lower price level from the current price level at the moment while placing the order.
4. Buy Stop Order –
In a strong trending market, price of any currency pair continually creates fresh Highs and fresh lows with a very few and small corrections and also a strong breakout occurs after the market is in the state of “No Trend” i.e. sideways. We use this type of order to enter the continuous on-going trend. Buy Stop order means to open a pending order for buying a position at the pre-desired market price which is above the current market price at the time when the current market price reaches that pre-desired level.
5. Sell Limit Order –
This order is similar like the Buy Limit Order. The only difference between these two is that it was a buying order, and this is a selling order. In simple language, we are opening an order for selling a position at a higher price level from the current price level at the moment while placing the order.
6. Sell Stop Order –
This order is same like Sell Stop Order. The only difference between these two is that it was a buying order, and this is a selling order. Sell Stop order means to open a pending order for selling a position at the pre-desired market price which is above the current market price at the time when the current market price reaches that pre-desired level.
7. Trailing Stop –
This is a dynamic type of order. Trailing stop order is actually a stop loss order with a twist, and that is the stop loss order keeps on trailing the price moment if it continues to go in our favorable direction. In trailing stop loss order we have to set a fixed no of pips as a stop loss for our trade, as soon as the price goes in our favorable direction, the order gets updated with that particular amount of pips, but does not update if the price halts or reverses from its peak. Trailing stop loss is used by those traders who want to profit from the trade as early as possible and also by those traders who speculate that the current price has reached its peak and now it will reverse in the opposite direction.
III. Exotic and Strange Orders
This segment of orders includes 3 orders and they are a unique type of orders; therefore, they are called as “Exotic Orders”. I used the word “Strange Orders” because these orders are unique, unusual and also very few brokers accept such type of orders. The list of all 3 types of exotic and strange orders is as following
1. GTC – Good till Cancelled Order –
This is an order in which we place a time limit of expiration of the order if it does not get executed until a particular amount of time. After placing this GTC order, our forex broker will not cancel the pending order at any point of time before our scheduled time. If, in case, we want to cancel the order, we will have to cancel our self.
2. GFD – Good for the Day Order –
This is an order, which automatically cancels the order if it is not executed at the end of the trading day. We have to be very careful while using this order because we will have to know that what timeframe does our forex broker use to complete the trading day, I am saying this because there are many forex brokers from all over the world and as they are located at different time zones; everybody’s start time and ending the day time is different.
3. OCO – One Cancels the Other Order –
This is a multiple input order i.e. we enter two orders simultaneously with the intention if one order is executed then the other should be cancelled. We can use this order if the market is trading sideways and we are not sure regarding in which direction we want to follow, as so we can place two orders, one for buy stop and another for sell stop. As soon as the market starts trending in one direction, the order gets executed, and the order of a different direction gets cancelled.
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