There are different types of forex orders. “orders” refers to how you enter or exit a trade. Let’s look at some of the types below:
Buying and selling at the best available price is a market order. Trading platforms execute orders at the exact price at that very moment.
Buying and selling above the market at a certain price is a limit entry order. For example, let’s say EUR/USD is currently trading at 1.2030 and you want to go short if the price reaches 1.2040. If the price goes up to 1.2040, your platform will automatically execute a sell order at the best price available. If you think the price will reverse upon hitting the price that you specified, then this would be a good time to use a limit entry order.
Buying above or below the market at a certain price is a stop-entry order. If you think the price will move in one direction, use a stop-entry order.
This type of order is very important! Additional losses will be prevented when using a stop-loss order if the price goes against you. Until the position is liquidated or you cancel the stop-loss order, it will remain in effect.
This type of order attaches to a trade and moves as price fluctuates. For example, let’s say you decide to short USD/JPY at 90.60, with a trailing stop of 20 pips. Your stop loss would be at 90.80 originally. If the price goes down and hits 90.40, your trailing stop would move down as well. The stop will never widen even if the market goes higher against you. It will stay at this new price level.
Orders that your broker does not cancel at anytime making it the trader’s responsibility.
Orders stay active until the end of the trading day. Check with your broker, but usually its 5:00 pm EST, when the US markets close.
These are two orders of entry or stop-loss orders that have price and duration variables, which are placed above and below the current price. As soon as one order is executed, the other order is cancelled.
For example, the price of EUR/USD is 1.2020. Either you want to buy at 1.2060 or initiate a sell if price falls below 1.970. So if the price does indeed hit 1.2060, your sell order at 1.970 is then cancelled.
OTO orders are set when you want to set profit taking and stop loss levels in advance. It is essentially the opposite of an OCO.
Most traders will only need the basic forex order types (market, limit-entry, stop-entry, stop loss, and trailing stop). Unless you’re a veteran trader, stick with these. It is also a good idea to practice with a demo account using play money until you fully understand your trading platform.