An order in the forex market is an instruction that a trader gives his broker on whether to buy or sell their currencies. Since different brokers offer different types of orders, it is best to enquire about the order types they offer before selecting one. While common order types include market order, stop loss order and limit entry order, there are some lesser known order types as well. Here they are...
Types of Orders in the Forex Market
Here are the lesser known types of orders in the forex market:
- Trailing Stop Loss order: It is a stop loss order fixed at a specified number of pips, rather than price, from entry and current price. This order lets the winning position run if a trade is moving as expected.
- Good Till Cancelled (GTC) order: This order remains active until the trader decides to cancel it. Since the forex broker will not cancel this order, it is trader’s responsibility to remember the order scheduling.
- Good for the Day (GFD): This order remains active until the end of the trading day, i.e. 5:00 pm EST (when the US markets close). However, traders should crosscheck the time with their individual brokers.
- One Triggers the Other (OTO) order: This order is set when traders want to set the stop loss levels and profit taking even before they enter trade. In OTO, buy limit as well as stop loss orders are placed only if the specified sell order is triggered.
It is up to the traders to design their own trading system with several orders in the forex market. Novices and inexperienced traders, however, are advised to stick to the basic order types, such as limit entry, stop entry and trailing stop.
Besides, traders must also be sure of their brokers’ order entry system before executing any trade. Traders that are uncomfortable with the trading platform and order entry system should avoid trading with real money to prevent losses. Finally, traders should also check for rollovers applicable on positions held longer than a day.
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