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Are you ready
to trade? How to place an order to your broker? What is Market order,
Limit order and stop order? Confuse? Not to worry, let's move on...
The term "order"
refers to how you will enter or exit a trade. There are few different
types of orders that can be placed into the foreign market.
Market
order
A market order is an order indicate to the broker to buy or sell
at the current market price. For instant, the currency pair is now
trading at 1.230 and you want to buy at this price, you can click
buy and your trading platform will execute the order instantly at
this price.
Limit order
A limit order is an order placed to buy or sell at a certain price
and duration. You specify the price at which you wish to buy/sell
a certain currency pair and also specify how long you want the order
to remain active. For instant, the currency pair is now at 1.200
and you want to buy when the price reaches 1.207. You can set to
buy a limit order at 1.207. Your platform will automatically execute
a buy order when the price reaches 1.207.
Stop-loss order
A stop-loss order is a limit order linked to an open trade preventing
losses if price goes against you. A stop-loss order remains in effect
until the position is closed or liquidated. For example, you bought
a currency pair at 1.2230. To limit your maximum loss, you set a
stop-loss order at 1.2200. In the event the price drops to 1.2200
instead of moving up, your trading platform would automatically
execute a sell order at 1.2200 and close out your position.
These are the basic order types that usually all traders use. There
are some other order types which are acceptable by some broker's
platform only.
GTC (Good till canceled)
A GTC order remains active until you close it. Your broker will
not cancel the order for you.
GFD (Good for the day)
A GFD order remains active until the end of your local trading day.
OCO (Order cancels other)
An OCO order is an combination of both limit and/or stop-loss orders.
Two orders with price and duration are placed above and below the
current price. When one of the orders is executed the other order
will canceled automatically. For example. The price of a currency
pair is 1.200. You want to buy at 1.210 in anticipation of a resistance
breakout or trigger a selling position if the price falls below
1.1900. If 1.210 is reached, you buy order will be triggered and
the 1.1900 sell order will be automatically canceled.
Please be sure
that you know which types of orders your broker
accepts. Different brokers accept different types of orders.
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