Order Placements That a Forex Broker May or May Not Follow

When you intend to place an order with a forex broker, it is really essential for you to know the procedure. Order placement depends on the type of trade you’re going to perform because it decides how you’re going to barge in and out of the market. Some of the most common order types are described below:

Market Order

It is the most general kind of order. When you intend to place an order at market price without any delay, then its market order. It can either be in the mode of a bid or ask price indicated on your screen. One can choose a market order to get into a new trade (buying/selling) or to get out of an already going on trade (buying/selling).

Stop Order

When a certain price is attained, then the market order is put forward to become a stop order. It can also be used for the same positions as described in the case of market order i.e., to get into a new trade (buying/selling) or to get out of an already going on trade (buying/selling). A stop order can be classified in a buy-stop order and a sell-stop order. A buy-stop order is an order to purchase a currency pair at market price when the market attains a certain price or more. Buy price should be more than that of the current market price. A sell-stop order is an order to sell the currency pair at the market price when the market attains a certain price or lower. The selling price should be less than the current market price.

• Stop orders are generally used to barge in a market when you intend to trade breakouts.
• The buy-stop order can also be used for trading a downside breakout.
• Stop order helps in minimizing your losses.

Limit Order

A limit order is preferred when you intend to barge in a new trade or to barge out of a current trade at a certain price or more. A limit order will be fulfilled only when the market is being traded at that certain price or more. A limit order can be classified in a limit-buy order and a limit-sell order. A limit-buy order is an order to purchase the currency pair at the market price when the market attains your certain price or lower. This price should be less than the current market price. A limit-sell order is an order to sell the currency pair at the market price when the market attains your certain price or higher. This price should be more than the current market price.

• Limit orders are generally used to barge in a market when you lose breakouts.
• Limit orders are utilized to define a specific objective for profit.

By getting an idea of various order types, one can easily choose the appropriate tools and techniques to gain maximum profit.