How Many Forex Order Types There Are And How To Use Them In Your
By Adrian Pablo, Thu Dec 8th
Once you have decided to enter the Forex trading world, one ofthe first things you will have to do is downloading the tradingstation provided by your chosen forex broker for free. When youopen your trading station software, you will find there are twomain ways to enter a market or, said in another way, there aretwo ways to place an initial order to buy or sell any currencypair.
"Market order"; this is an order to buy or sell a currency pairat the market price the instant that the order is received andprocessed (within seconds of hitting the "OK" button on yourscreen). When a market order is placed, you are simply saying"I'll buy or sell the currency pair at whatever price it is atwhen my order gets processed."
"Entry order"; this is an order to buy or sell a currency pairwhen it reaches a certain price target. This can be any price intheory. You could set an entry order for the low price of a timeperiod, or the high price of a time period. As an example, oneusual recommendation is that you must always set an entry orderto be the same price as the 'open price" of the time period.When you place an "entry order" to buy, for example, you aresimply saying "I want to buy this currency pair at a certainprice,
if it never reaches that price, I don't want to purchasethe pair."
After your "entry order" is placed, you can set a stop and/orlimit order if you desire, and for your own security. Stop andLimit orders are two different ways to exit a trade,automatically (i.e., without closing out your position via theclick of your mouse - manually), after the trade is entered.
A "stop order" (something I will always recommend you) is usedto stop losses. A "limit order" (recommended if you can'tmonitor your open trade) is used to redeem profits. Where theseorders are placed, in relation to your open trade, depends onthe direction of the entry order.
Remember; a "stop order" is always placed below the currentmarket value of that currency pair when you are in a long (buy)trade. And a "limit order" is always placed above the currentmarket value of that currency pair when you are in a long (buy)trade.
About the author:Adrian Pablo; Forex traderand freelance writer
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