What are the trading orders on the Forex market?
Each terminal, in addition to the standard orders, offers a set of orders, through which a trader can automate any technical trading strategy.
Order is an order to the broker to make a trade. A trader to make a deal just open Terminal and press "Buy" or "Sell". However, simple buy/sell at the market price and without the use of special types of orders can lead to rapid loss of deposit. Experienced punters enjoyed a number of orders, each of which is required in certain market situations.
A market order is the simplest function. Paying the broker market order, the trader buys/sells the asset at the current price. However, for vysokovolatilnyh assets market orders often are executed with slippage: Broker handles applications for several seconds and during this time the quotation may change not in favor of the stock player. Market Order prevents exactly open a position at a given price, it only guarantees the execution of the transaction.
The simplest type of order that is used to enter the market at the current price. Buy-broker buy selected asset in the expectation that quotes will continue to grow. Buying an asset in terms of traders is called a long position when the player acquires the shares/contracts/currency with the intent to sell them more expensive. Opening of long positions is permitted on any type of accounts: the trader can buy an asset as its funds (cash account), and using the borrowed capital (margin account). Long position involves making a profit as a result of market growth.
Sell is an order to sell the asset. The vast majority of traders do not own real assets: they important only prices and speculative potential of goods, but not the actual currencies, stocks or futures. So for profit when markets fall, players must sell what they don't really know. This operation is possible only on margin accounts. Trading on margin account necessarily imply the reverse operation: If a player sold euros for dollars, he is obliged to redeem euro back for the closing of the transaction and profit/loss.
A limit order is an instruction to the broker to open a position at a set or a better quote. Unlike the market order, Limit Order will be executed only at the trader or best price, so the Broker cannot "choose" quote for the transaction. On vysokovolatilnyh markets, the pricing change too quickly, so a limit order does not guarantee execution of the transaction, if the price of an asset will go too far from the specified values.
Buy Limit function is used for the purchase of an asset for a given quote. At the moment of placing the order the current market price should be below the strike price of the warrant. Buy Limit is used in situations when it is expected to rebound from an important price level. For example, Buy Limit used in pricing corridor, buying an asset at FIBO-levels or lines of support that pricing should not Pierce.
Sell Limit order works in a similar way. It is set for the sale of an asset under the important levels, that price would not be able to penetrate. This type of order does not guarantee execution of transactions for the stated price, because it is possible that the specified level is not enough buyers.
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A stop order is activated when the price reaches a specified level. When quotes cross stop order level automatically performs a specified function.
This order is set for the purchase of an asset once the price will pass the stop level. The current price at the time of installation of the order must be below the stop level. Punters use the Buy Stop to purchase the asset at a time when prices cross the important level. Buy Stop involves opening positions on the "worst" quote that confuses novice traders. However, this feature is useful when trading on the break. Punters try to enter the market only after explicit confirmation of the breakdown and Buy Stop allows you to open a position at a specified or the "worst" quote, i.e. costs, supporting breakthrough level.
The same order is used for opening short positions after the breakdown level. Sell Stop involves the sale of an asset once the pricing got enough momentum to break through important levels. Function is usually set below the Fibonacci levels, support line or moving average.
The most obvious way to use the stop order is limiting losses on the deal. Stop-Loss is put in accordance with the rules of money management and conditions for a specific trading strategy: below the current price when you open a long position and above-for short positions. Most often, the Stop-Loss order is set by the rule of the balance of risks to profit at 1:3. For example, if a trader expects to take 60 pips profit, he is ready to take a risk at the level of 20 points.
This is a modified version of the Stop-Loss order, which allows you to follow quotes on a certain distance, keeping thus already gained profit. For example, when long-term trade exchange, the player can set the Trailing Stop at a distance of 75 items from the current price, which would allow him to capture every 75 pips profit. It is important to mention that unlike all other orders, Trailing Stop is treated on the side of a trader rather than a broker, accordingly, the order will not work when your trading terminal is switched off or if you lose connection with the server.
Duration of orders
Each order has its duration or period of performance. By default, the order will be activated to achieve a specified price, but punters can choose lifespan of such order:
- per minute-there is a specified number of minutes (usually up to 5);
- one day, until the current day or trading session;
- to cancel the transaction prior to the opening of the active-or manual lifting trader;
- prior to the date of execution is valid until the date specified by the user;
- immediate execution is performed immediately (partially or completely) or is not executed at all;
- execute or cancel-runs immediately and fully, or not executed at all;
- at the beginning of the session is activated when opening the Exchange;
- According to the latest price-marks when closing trades.
Thus, the punter can set an order to open a position at a specified time and according to strict market conditions. This diversity of orders allows you to automate even the most complex trading strategy.