Forex Order Types You Need To Know
Before start trading, there are some order types of Forex types you must be familiar with and have the ability to use these types of order in your trading experience. The term “order” in Forex refers to how you will instruct your broker to enter or exit a trade on your behalf.
There are many different types of Forex orders, which traders use to manage and execute their trades. These may vary between different brokers, there are some basic order types that all brokers accept.
The Forex order types fall into two categories:
Market order: Is an instruction to buy or sell a security immediately at the current price
Pending order: Is an instruction to be executed at a later time when certain preconditions specified by the trader are met. These orders fall into two categories, limit orders and stop orders.
Market Order
The most common type of order in Forex is the market order. Market order is used to enter or exit the market immediately. This order is used to get into or out of a position instantly at the current market price.
Limit Order
A limit order is an order to buy or sell if the market moves to your desired level at a specified limit price. For instance, if price has just broken out and made a new high, you can place a “Buy Limit Order” to buy at or below a specified price or you can You can place a “Sell Limit” order to sell at a specified price or better.
Stop Entry Order
A stop entry order can be used to trade break-outs. It stops an order from being executed until the price reaches a stop price. This type of order is used in a trading strategy when you want to buy only after the price has risen to your stop, or sell only after the price has fallen to your stop.
Stop Loss Order
A stop loss order is a bit different from the order types above. This is because the types above are orders to get you into a trade whereas a stop-loss order is a limit order to get you out of the trade. It’s an exit order.
This type of limit order it to prevent you from losses if the price goes against you. If you are in long a position it is a sell STOP order. And if you are in a short position it is a buy STOP order.
Conclusion
It is important to know the different types of Forex orders and implement them in your Forex trading strategy. As you can understand, stop losses are extremely useful when it comes to Forex trading, especially if you worry that you will lose your money.
