- There are 3 basic classifications of order types for Forex
- Market orders execute at the current price
- Entry orders are set away from the market to execute at a later time
A trader has many tools at their disposal in order to trade the strategy of their choosing. These tools come in the way of different orders that allow the trader to enter and exit the market at their convenience. Today we will look at three of the prevailing order types used by Forex traders.
The market order is probably the most basic and often the first order type traders come across. Just as the name implies, market orders are traded at market! This means if you want to get into the market immediately, you can trade a market order and be entered at the prevailing price.
Typically scalpers and day traders rely on market orders to enter and exit the market quickly, in accordance to their strategy. To find out more about trading with market orders, read through the material at the DailyFX University linked below.
The next order type is the entry order. These orders are unique in that they can be set away from present market prices. If price trades at the price selected, the entry will enter the market and open a new position. There are many benefits to trading with entries, including not having to be in front of your computer to execute your orders!
Normally entry orders can be used for breakouts or with other strategies that demand execution when price passes a certain point. To learn more on trading entry orders click the link to the FXCM University below.
Stops & Limits
Stops and limits are orders that everyone should familiarize themselves with. While stops and limits are technically entry orders, they deserve special attention due to their importance. In Forex a stop is an order used to manage risk being placed away from the positions entry point. Likewise Limits are placed away from entries but are used as an order to take profit.
Since Stops and Limits in Forex operate differently from Stop and Limit orders in the equities market we suggest reading up on their uses. For more information on this order type, click the link below to find an article and video on the DailyFX University.
The only way you can get comfortable with using different types of orders is to practice trading with them. Once you have read about all of the orders available, trade them on a demo account. You can sign up for a FREE Forex Demo account with FXCM and try them out immediately!
---Written by Walker England, Trading Instructor
To contact Walker, firstname.lastname@example.org. Follow me on Twitter at @WEnglandFX.
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