Types of Orders

The term “Order” refers to how you will enter or exit a trade. Here we will discuss the different types of orders that can be placed in to the foreign exchange market.
You know how an individual trade works, how to calculate your profit and loss, and even how leverage influences your trades. Now you’re at the final step. We’ll cover what you need to know about making a trade in foreign exchange.

Forex brokers offer several different type of orders:

Market Order – is a commitment to buy or sell a security at the current price. Execution of this order results in opening of a trade position. Securities are bought at ASK price and sold at BID price.
Stop Loss and Take Profit Orders (described below) can be attached to a market order. Execution mode of market orders depends on the security traded.Pending Order - is the client’s commitment to buy or sell a security at a predefined price in the future. This type of orders are used for opening of trade position provided the future quotes reach the predefined level. There are four types of pending order available within the terminal:

Buy Limit – buy provided the future “ASK” price is equal to the pre – defined value. The current price level is higher than the value of the priced order. Orders of this type are usually placed in anticipation of that the security price, having reached a certain level, will keep on increasing;

Buy Stop – buy provided the future “ASK” price is equal to the predefined value. The current price level is lower then the value of the placed order.
Orders of this type are usually placed in anticipation of that the security price, having reached a certain level, will keep on increasing;

Sell Limit – sell provided the future “BID” price is equal to the predefined value. The current price level is lower than the value of the place order. Order of this type are usually placed in anticipation of that the security price, having increased to a certain level, will fall;

Sell stop – sell provided the future “BID” price is equal to the predefined value. The current price level is higher than the value of the placed order. Orders of this type are usually placed in anticipation of that the security price, having reached a certain level, will keep on falling.

Ordered of Stop Loss and Take Profit can be attached to a pending order. After a pending order has triggered, its Stop Loss and Take Profit levels will be attached to the open position automatically.

Stop Loss – this order is used for minimizing of losses if the security price had started to move in an unprofitable direction. If the security price reaches this level, the position will be closed automatically. Such orders are always connected to an open position or a pending order. The MT4 platform checks long positions with BID price for meeting of this order provisions, and the ASK price for short positions.

To automate Stop Loss order following the price, one can use a Trailing Stop.

Take Profit – Take profit order is intended for gaining the profit when the security price has reached a certain level. Execution of this order results in closing of the position. It is always connected to an open position or a pending order. The order can be requested only together with a market or pending order. Terminal checks long positions with BID price for meeting of this order provision, and it does with ASK price for short positions.

ATTENTION: Stop Loss and Take Profit orders can only be executed for an open position, but not for pending orders;

Trailing Stop – Another type of fore order, a trailing stop is intended to limit your downside, but still maximize your upside. With a trailing stop, the stop loss always trails the price by a certain amount. Say, for example, that you want to buy USD/CAD at 1.1243 but at no point do you want to lose more than 20 pips, and you don’t want to give up more than 20 pips of upside. You enter the trade with a trailing stop for 20 pips. As such, the trailing stop will ” trail” the currency pair when it moves in your direction, but not against it. So, if you were to buy USD/CAD at 1.1243, and it was to rise to 1.1273, then the trailing stop would sit at 1.1353. No matter where the currency pair goes from there, you have already locked in a 10 pips gain, even if it plummets in price.

There are four most common orders, and the only orders that stop Forex traders should need to know.