Forex trading isn’t just about buying or selling. You have several different order types you can use to trade Forex better and more safely.
Market Order: This order type is used to enter or exit the market immediately at the current quoted price. If you want to buy you will be filled at the ask price; if you want to sell, you will be filled at the bid price.
Limit Order: This order type is used to buy or sell a pair at a predetermined price. A buy limit order will only be filled if the market trades at or below the limit price you determine. A sell limit order will only be filled if the market trades at or above the limit price.
Here you’re basically entering the trade only when the market price meets the criteria of your trading method.
Stop Order: This order type is used to buy or sell a pair at a predetermined price. A buy stop order will only be filled if the market trades at or above the stop price. A sell stop order will only be filled if the market trades at or below the stop price.
The stop has 2 objectives:
- Limit your losses to a predetermined amount to make sure you don’t lose too much.
- Ensure a certain profit once your trade has gained a predetermined profit margin.
The Stop can be placed at a specific price or set as a trailing stop to move with the market price at a certain margin.
Those are your order types.
p.s. A new complimentary video shows how to reduce risk in Forex trading. Make sure to watch it before it’s taken down: Click here to watch the video
