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How Many Forex Order Types There Are and How to Use Them In Your Favor.
How Many Forex Order Types There Are and How to Use Them In Your Favor.
by Adrian Pablo
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Once you have decided to enter the Forex trading world, one of
the first things you will have to do is downloading the trading
station provided by your chosen forex broker for free. When you
open your trading station software, you will find there are two
main ways to enter a market or, said in another way, there are
two ways to place an initial order to buy or sell any currency
pair.
"Market order"; this is an order to buy or sell a currency pair
at the market price the instant that the order is received and
processed (within seconds of hitting the "OK" button on your
screen). 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."
"Entry order"; this is an order to buy or sell a currency pair
when it reaches a certain price target. This can be any price in
theory. You could set an entry order for the low price of a time
period, or the high price of a time period. As an example, one
usual recommendation is that you must always set an entry order
to be the same price as the 'open price" of the time period.
When you place an "entry order" to buy, for example, you
are
simply saying "I want to buy this currency pair at a certain
price, if it never reaches that price, I don't want to purchase
the pair."
After your "entry order" is placed, you can set a stop and/or
limit order if you desire, and for your own security. Stop and
Limit orders are two different ways to exit a trade,
automatically (i.e., without closing out your position via the
click of your mouse - manually), after the trade is entered.
A "stop order" (something I will always recommend you) 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.
Remember; a "stop order" is always placed below the current
market value of that currency pair when you are 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.
About the author:
Adrian Pablo; Forex trader
and freelance writer
>> http://www.1-forex.com
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