Order Types in Forex Trading?

[Paulsy]

Trading orders are among the top forex trading terms that every trader should know. There are two main types of trading orders provided by the Metatrader or the forex broker platform. The traders usually choose to set the forex order according to several factors which include the trading strategy, the account type, leverage, and risk management.

Market Orders ​

Market orders are defined as immediate orders to buy or sell at the next available price. Essentially, market orders are executed faster but the next available price could be different the trader is monitoring on the chart. During volatile times the next available price can change much higher or lower than the prospected price by the forex trader. This is another forex trading term which is called slippage. While you are starting your first steps as a beginner, you'll need always to remember that opening market orders during high volatility times can result in high slippage.

Limit Orders ​

Limit Orders are limited types of orders which will be expected at a specified price or at a better price. It is different from market orders as they allow full control over execution price. Eventually, the downside of the limit orders is that they won't be executed if the order price is not available at the time of execution. However, forex traders like to use limited orders to be able to execute their strategy targets effectively.

Pending Orders​

Pending orders are orders which take place according to a certain level. These orders are set to execute in the future when the price hits certain entry levels. The pending orders in forex can be controlled by certain rules such as setting an expiration date, or GTC. Initially, pending orders can be executed as limit orders or as market orders depending on the trading strategy.

Stop Loss (SL)​

A Stop Loss level is a preset price level at which the trade is closed automatically. It is usually placed with a market or a pending order. This order can help in minimizing the losses if the price begins moving in the opposite direction.

Take Profit Order (TP)​

A Take Profit order is used to automatically close a trade when the price reaches the targeted profit levels. On the contrary to Stop Loss, Take Profit is intended for keeping profits.

Trailing-Stop ​

The Trailing Stop is a pending order which is automated to close a position at a certain number of pips away from the highest price reached.

Buy-Stop ​

Buy Stop is a pending market order which is placed above the current price to buy once the price rises above the level.

Sell-Stop​

Sell Stop is a pending market order which is placed below the current price to sell once the price falls below the level.

By learning the main forex trading terms, the investor should be able to understand the different definitions and common trading language used by forex experts. There are major benefits from understanding all glossary words as they are going to be repeated in forex tutorials and online forex courses. Eventually, Forex trading has been evolving over the decades and it requires a long time to understand all trading terms. Consequently, it is always good to be patient with learning the basics of forex trading.