To trade the Forex market, traders must understand the different type trading orders. The following are some of major types of orders that can be found on most Broker trading platforms if one would to trade Forex.
Market Order – A market order is an instant order to buy or sell a currency pair at the current market price and is used to enter or exit the market quickly. Under normal market conditions without any major news release, market orders are executed instantly. When a market order is placed, what the trader means is simply to buy or sell the currency pair at whatever price it is traded now. Under extreme volatile market conditions, especially during major news release, it is possible for a trader to get re-quoted. This means that when prices are moving very rapidly, the price requested may have already changed by the time the order is received by the broker. If this occurs, the broker will immediately provide the trader with a new quote price. The trader can then choose whether to execute the re-quoted price. However, it is important to note that under no circumstances will a market order be filled unless the trader agreed to it.
Limit (Entry) Order – A limit order is a pending order placed to buy or sell a currency pair at a specific price to enter the market. The order essentially contains two variables: price and time. The trader specifies a price at which he is willing to buy or sell a certain currency pair and also specifies the time that the order should remain active. A limit order can be entered either as GTC (Good till cancelled) or GFD (Good for the day). A GTC (Good till cancelled) order will remain active in the market until the trader decides to cancel it. The broker will not cancel the order at any time. It is the responsibility of the trader to remember that he or she possesses the order. A GFD (Good for the day) order will remains active in the market until the end of the trading day. As the currency Spot market is an ongoing market, the end of day will normally be 00.00 GMT on the broker trading platform.
Stop (Exit) Order – A stop exit order is a pending limit order placed to buy or sell a currency pair at a certain price in order to exit the market. The order contains the same two variables, price and time. The difference between a limit order and a stop exit order is that stop order is used to exit the market whilst limit order sole purpose is for entering the market. In Forex trading, Stop exist orders are used for various reasons. To exit the market once a trade loss has occurred. Use to exit the market when the trader profit target is reach.
Trailing Stop Order – A trailing stop for a sell order sets the stop price at a specified number of pips below the market price.
OCO (One Cancels the Other) Order – An OCO order is a mixture of two limit and/or stop orders. Two orders with price and time variables are placed above and below the current price. When one of the orders is executed the other is automatically cancelled.