Types Of Orders In Foreign Exchange

Orders in foreign exchange can be defined as the manner in which you trade a particular currency pair. In other words, placing a trade order in forex is how you enter or exit a trade or position in the market. There are different orders in foreign exchange.

The new traders entering foreign exchange market usually think that the buying and selling part of currency exchange trading would be fairly straightforward, however, there are various types of orders in foreign exchange which are intended to help you maximize your profits and limit losses. Let’s now examine the four basic orders in foreign exchange online that are commonly used for entries- market orders, stop close only orders, stop orders, and limit orders. It is important to note here that not all types of foreign exchange orders are available in every forex exchange. Therefore, you must check the exchange you will be trading on for a list of the available order types.

These types of foreign exchange orders are used to enter the market without any restrictions on what the price should be. The market order is generally placed on the open of the day or the close of the day. These orders can also be placed anytime during the day through a broker and either buying or selling “at market.” These orders in foreign exchange online are simply the obvious and easiest way to put on a trade. Market orders may be turned into viable entries by adding another condition to them that will signal an implied direction. The effective use of a market order would be in case of “buy tomorrow at market if the open tomorrow is greater than the high of today.”

Stop Close Only (SCO) orders are the orders in foreign exchange with an important twist associated with them. The twist is that to enter long, the market must close above a price that we have pre-selected. For a sell, the market must close below our pre-selected price. Here is an example which will better explain the situation:

Suppose a trader buy a contract on the close at 990.50 stop close only orders. This means that if the price closes at or above 990.50, the market will fill your order at the market. The idea is that with an SCO order, you have placed an important restriction on the market order, making it a viable entry. This forces the strategy developer to find a price that the market must close above (or below) before the strategy takes a position. By placing this restriction on a market order, we have turned it into a valid type of entry.

Among different orders in foreign exchange, the stop orders are considered to be the easiest to create a valid entry. These types of orders in foreign exchange online require the market to pass through a certain pre-selected price before a contract can be bought or sold. The best way to create innovative entries and confirm the entry rules is through stop orders in foreign exchange. The reason behind the fact that stop orders are generally preferred to stop close only orders is that they guarantee that a trader’s strategy will enter the market regardless of when during the day the price is hit. A trader will not have to wait for the close and you may catch a big intraday move that would have been lost if a trader had to wait for a stop close only orders in foreign exchange.

Limit orders in foreign exchange are opposite of stop orders. The nature of limit orders is that they require prices to be moving in a direction opposite the set-up. The main purpose of limit orders is to place a resting buy order somewhere below the prevailing market price at the present moment. This effort is done pick off a lower and better price than where the market is currently. Traders can also place a resting sell order above the current price to sell at better than current prices. Limit orders are primarily used in support and resistance strategies and are generally not effective.