Types of orders
- Analyst AZA
Types of orders in the forex market
To open a position, or close it, a trader needs to use special orders - exchange orders. They come in a variety of options.
First of all, market orders and deferred orders are distinguished.
Deferred orders are divided into the limit, stop and stop. Any order can be used by the player to purchase or sell. Let's consider, in more detail, each of the variants of applications.
1. Limit order (limit order) is an order to buy (sell) a fixed amount of the instrument (asset) at a price that is specified, or the better price.
A limit order for a purchase is an application that is made at a specified cost or lower. Of course, buyers on hand, when the price is lower.
It is exposed to a price that will be understated lower than the current market value. Such a warrant is actively used by the speculator when he is confident or hoping to rebound up. Initially, the price is reduced, but reaching the level, makes a turn and begins to increase rapidly.
Limit order to sell, it is accordingly, a warrant for sale, at a price that is specified or higher, it will be profitable for a trader to sell at a price as high as possible. This order is placed at a price that will be higher than the market price at the current time.
The player actively uses an order like sell limit, if he believes that the price, after some growth, will make a turn, and then it will fall. That is, the trader uses such an order because he hopes for a rebound from the resistance level.
For the limit order to be successfully implemented, we need to have a reverse market order present. An application of this type is actively used by the exchange's participants to open a position, as well as to close it (with a profit).
An order like buy limit promotes the exit from the sale, and the order sell limit - provides a way out of the purchase.
Traders who use limit bids, provide an opportunity for other exchange speculators to make trading transactions and thus receive revenue (provide liquidity).
All requests of the limit type, which are sent to the market by traders, form a glass of orders.
The sell limit sells at the best price, at the Bid price, and accordingly, the limit buy-limit order, at Ask price, and the distance (gap) that arises between them will be a spread.
2. Market Order
As for the market order, then such an application is implemented immediately after entering the market, and at the current price, but if there is a reverse limit order for it.
The market bid for the purchase will be executed at the price of Asuka, and the market order for sale at Bid's price, respectively.
Market orders are actively used not only to open positions but also to close. Closing is possible with both profit and loss for the trader.
3. Stop the order
It is an application for the purchase or sale of a fixed amount of the instrument. The price is taken as indicated, or worse.
A buy stop order is an order for purchase, at a price that is either specified above. Used by the player, when there is hope for an increase: the price moves up, and then, reaching the level, continues its growth. The order is set at a higher price than the current market price.
For the buy stop order to be executed and triggered, the condition must be met. Namely, the price of Ask equalled or was more than the price, which is specified in this application.
The sell stop order represents a sale order that will be executed either at the specified price or at a lower price. It is exposed to a price that is taken lower than the current one. This is explained by the trader's hope for the continuation of the fall. The price, having reached the level, will not stop, but will continue its decline.
For this application to work on Forex, we also need to fulfil the condition: Bid's price should be equal to or less than the set price. Stop orders are used by players to open a position or exit the transaction.
In case of closure, the order will perform a security function that limits losses by stopping them, such as stop loss.
4. Stop limit the application
This is a combined order type, the order successfully combines stop and limit orders. In it, there are two prices - a limit and a stop. Prices may vary or be identical. They are used to fix the size of slippage and are not supported by all broker companies.
Without knowledge and understanding of warrants, forex trading simply can not be effective: the use of orders not only protects against losses or preserves profit but also makes the process of trading more streamlined and complete.
For the buy stop order to be executed and triggered, the condition must be met. Namely, to the price of Ask equalled, or was more than the price, which is specified in this application