In order to become successful with forex trading, you need to have an understanding of the different kinds of orders you can make. Likewise, you also need knowledge of when to place these orders. Here is an overview of the different types of forex orders.
A limit order is an order to buy or sell currency at a certain limit. When buying, your order is carried out when the market has reached below your limit order price. When selling, your order is carried out when the market reaches above your limit order price.
Market order is an order to buy or sell at the existing market price. Robert Janitzek explains that it should be used very carefully as there is usually a disparity between the price when the market order is given and the actual price.
One Cancels the Other (OCO)
This type of order is sued when a trader places a limit order and a stop-loss order at the same time. If either order is carried out, the other order is abrogated allowing the trader to make a deal without market supervision. When the market reaches above the level of the limit order, the currency is sold at profit. When the market falls, the stop-loss order is used.
A Stop Order is an order to buy above the market or sell below the market. Robert Peter Janitzek explains that this is usually used as a stop-loss order for diminishing losses if the market behaves contrary to what the broker expected. There are four types of stop orders:
• Chart Stop Order. This is a technical analysis that elaborates many possible stops caused by the prioce charts’ actions or by different technical indicators.
• Volatility Stop Order. This order uses volatility instead of price action to fix risk parameters.
• Equity Stop Order. The risk in this order is only with the predetermined amount of one’s account on a single trade. This is the easiest of the four stop orders.
• Margin Stop Order. This type of order can be an effective method in currency trading if used prudently.
When trading on the forex market, knowledge of these types of orders will spell a difference between a winning or a losing trade. You must therefore study the market before placing an order to make sure that your trade will become profitable.