The word “order” refers to how a trader will enter or exit a trade.
In here we will talk about the different types of Forex orders that can be set in the forex market.
Traders should make sure they know which types of orders their broker accepts.
Different brokers take different types of Forex orders.
There are some key order types that all brokers provide and some others that sound weird.
- Market Order or Entry Order – It is an order to purchase or sell currency quickly at the current price.
- Open Order – It is an order to buy or sell a financial instrument that will remain open until you close it or you have you broker close it. Example: Forex, Stocks, or Commodities
- Limit Order – It is an order put away from the current market price. Thinking that EUR/USD is traded at 1.34. If you want to go abridge (place a sell order on this currency pair) if the price reaches 1.35, so you put an order for the price 1.35. This order is called limit order. So your order is arranged when the price reaches the peak of 1.35. A but limit order is always set lower than the current price whereas a sell limit order is always set higher than the current price.
- Stop-Entry Order – It is an order that a trader give to purchase above the current price or an order to sell lower than the current price when you think the price will remain in the same direction. It is the contradiction of a limit order. Let’s believe that EUR/USD is being trade at 1.34. You want to move longer if the price reaches 1.35, so you put a stop-entry order to buy at 1.35. Example: Place a buy order on this currency pair.
- Take Profit Order (TP) – It is an order that closes your trade shortly after it reached a certain level of profit.
- Stop-Loss Order (SL) – It is an order to close your trade shortly after it reaches a certain level of loss. In this strategy, you can decrease your loss and avoid losing all your capital. You can make stop-loss order with automated trading software. It’s a good thing since even you’re on holiday when you don’t watch how the market and currency rates change, the computer does it for you.
Execution – It is the process of finishing an order. When you put an order, it will be sent to your broker, who decides whether to fill it, reject it, or re-quote it. Once your purchase is filled, you will be sent a confirmation from your broker. It is critical to have your orders executed shortly. If there is a delay in brimming your order, it can cause you losses. That is why your forex broker should execute orders in less than 1 second. Why? Forex is a swift market – and many forex brokers don’t keep pace with its speed, or purposely slow down execution to abduct a few pips from you even during gradual market movements.
Re-quote – It is a biased execution method used by some brokers. It occurs when your broker does not want to execute your order on the price you put and slows down execution for its own advantage.
How does this take place?
• You decide to purchase or sell a currency pair at a definite price;
• You click the button to put your order;
• Your broker accepts the order;
• You receive a re-quote notice on the trading app you’re using;
• You can either offset your order or get a worse price.
How can you avoid re-quotes?
• Find a forex broker with no re-quotes policy;
• Place a set order: tell your broker ahead that you are only open for placing an order at a definite price or better.