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Five Fantastic Kinds of Trade Orders
The basic goal of Forex trading is maximizing profits, while minimizing losses. The great thing about Forex is that there are a wide variety of Trade Orders that exist to accomplish this goal. Without further adieu, here are some types of Trade Orders that you can choose.
Entry-Limit Orders – The first order on our list deals with a specific request to open a new position at a specific price. Essentially, you simply name your price, and the order will remain active until canceled, or the price is reached and the trade is completed.
This kind of order is great because in can make sure that you always receive the desired purchase price for a currency pair. Wouldn’t it be fantastic if all purchases worked like this? Imagine going to a computer store and naming a price you were willing to pay for a desktop. Then, the store clerk waits until the price is reached, and subsequently delivers the desktop to your house. That’s service! Essentially, Early Limit Orders allow the investor to have much more control over the price he or she pays to purchase currency.
Stop-Limit Orders – This second kind of order us geared towards stopping any potential additional losses that may occur if a price arrives at a pre-defined point above the defined purchase price. Just like entry orders, this kind of order remains in effect until it is canceled, or has its position liquidated.
Stop orders are sometimes referred to as stop-losses and can be extremely helpful to those Forex traders wanting to limit the amount of their losses on a specific trade. A stop order can also be used in order to ensure that a profit is earned once a particular desirable price is obtained on an open position. Therefore, if the pair price of a currency starts to fall again, it can still be sold for a profit.
Traditional Limit Order – The third type of order is very similar to both stop and entry limit orders. However, it is geared to help traders decide at what level they would like to take their profit. For going long on a position, a limit order would be determined above the purchase price. On the other hand, for shortening a position, the limit order price would be set below the purchase price.
Market Order – The fourth kind of order is an order to buy or sell the desired currency at once, at the current exchange rate that is given to you by your broker. This type of order can be executed almost immediately and at the price that you may have observed most recently when you made your decision to request to sell or buy a currency pair.
There are many different ways to carry out trades on trading platforms. However, it is usually relatively simple to complete a market order trade. Closing and/or opening a position can often be completed with the simple click of a button. Depending on the result, money can either be added or subtracted from the account.
Order Duration – The fifth type of order is determined simply by the duration (subsequently, there are three different potential durations to choose from). While the aforementioned market orders are always completed at the time the transaction is initiated, limit orders can last for varying amounts of time. Generally, transactions remain active until executed by default, but some brokers allow one of three possible time designations for a currency trade.
GTC (Good ‘Til Canceled) – Exactly as it reads, this order remains open until it is filled, or canceled by the Forex trader. It is an order to buy or sell at a selected price.
OCO (Order Cancels Other) – This duration involves a mix of 2 stop, entry, or traditional limit orders. 2 orders with the same exact variables with respect to price and duration are placed both below and above the current price. Naturally, when one order is executed, the other is immediately canceled. This gives persons to open opposing positions and stick with the one that at the outset holds true.
GFD (Good For the Day) – The Final duration is also fairly straightforward. A GFD duration lasts until the end of the trading day. Forex is ongoing, so the day ends according to an hour, which is usually made known by the Forex broker you are working with.
Different types of orders allow for a much more flexible trading to take place. Analyzing what is best for you is the challenge. However, many people find that using a mix of different kinds of orders can often lead to the most success. That being said, if you find something you like, don’t be afraid to stick with it. Be sure to always consult your broker in order to make the most informed decisions possible.
By-line:
Heather Johnson is a freelance finance and economics writer, as well as a regular contributor for CurrencyTrading.net, a site for currency trading and forex trading information. Heather welcomes comments and freelancing job inquiries at her email address heatherjohnson2323@gmail.com .
