Beginner! These are 5 types of Forex orders that you need to understand well
When you make a transaction to enter and exit forex trading then you have made an order. So that you can more clearly understand what is meant by an order, this time we will provide a full discussion for all of you. This aims to increase your knowledge of new ones and start trading on the forex market.
Here are 5 types of orders that are in the forex market.
The first type of order is a market order that refers to buying and selling activities when the price is in the best position. A simple example like this, for example the bid price for the EUR / USD pair is at 1.06332 and the ask price is at 1.06345.When you will buy a EUR / USD pair on the forex market, EUR / USD will be sold to us at the ask price of 1.06345.
When you start pressing the buy or buy button on the platform, the purchase you make will be at the price mentioned above.
2.Limit Entry Order
When you place an order to place a price that has been targeted, that is what is meant by a limit entry order. The limit entry order for purchase will be placed below the price at the time the order is made, while the limit order for sale is placed above the price at the time the order was made.
In order to better understand the above understanding, let’s look at the following example. We assume that the GBP / USD pair is currently trading at 1.5270. Then you want to sell this pair when the price reaches 1.5280. Thus, you will set the sell limit order at the price of 1.5280. Trading platform where you make a transaction will make the order you make when the price touches 1.5280, so you don’t have to bother waiting for the price to touch the desired value.
Vice versa, for example, if you want to buy a GBP / USD pair at the price of 1.5250, then you can set the buy limit order at such a price. The platform will automatically place orders that you have made when prices touch that level.
3.Stop Entry Order
Stop Entry Order occurs when an order you place is at the target price. Seeing the meaning of the Stop Loss Order is very similar to the Limit Entry Order. The thing that distinguishes Stop Entry with Limit Entry is the placement of an order against the price when the order is made.
Stop Entry for purchase will be placed at the top of the price when the price is made, while the limit order to sell is placed below the price at the time the order was made.
For example like this, there is a GBP / USD pair which is currently trading at 1.5260 levels. Next you want to buy when the price touches 1.5300, then you need to set the buy stop order at the price of 1.5300. When the price touches 1.5300, the platform will do the order you want.
Likewise when you want to sell the GBP / USD pair when the price is at 1.5100.Then you can set sell stop orders at such prices.
4. Stop Loss Order
When you place an order in forex trading with the aim of preventing greater losses when prices move in opposite directions, that’s when you are doing a Stop Loss Order. The Stop Loss Order that you make will remain valid until the related transaction position is closed or you cancel the order.
A simple example like this, you will open a transaction for buying the EUR / USD currency pair at a price of 1.2140. Next you set a strategy to limit losses by setting Stop Loss at the level of 1.2110. When you do this, then when the price moves down to the level of 1.2110, the platform will automatically execute and close your order.
Many people who use the Stop Loss Order do not need to wait all the time as long as the position is open. Thus you do not need to worry about losing capital when prices move in opposite directions with predictions made. Stop Loss is very useful to limit possible losses and on the other hand you can leave the transaction that is being carried out.
5.Trailing Stop Order
The last order is a Trailing Stop Order that is closely related to the price movement of a currency pair. Thus we can interpret that Stop Loss will change following the price movement of the currency pair being traded.
Consider the following example, suppose you decide to sell the EUR / USD pair at a price of 1.2050, then you use a Trailing Stop of 20 pips. When you do this, it means the Stop Loss value when the price touches 1.2070. When the price starts to move down and starts to touch the price of 1.2020, the Trailing Stop will follow down to the 1.2040 level.
The transaction that you make will continue as above as long as the price movement does not reverse direction and touches the Trailing Stop. In simple terms, we can say that the price will not be reversed by 20 pips. Because if things happen, then the transaction will be automatically closed by the system.
That’s the 5 types of orders that you need to understand in transactions on the forex market. From the explanation above, we can know that each order has advantages that you can use as a trader to help get a profit.
Understanding the order basics as we have stated above will be very useful for beginners who have just entered and started transactions in the forex market.
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