Types of Orders in the FOREX Market

Different terminology for order types in FOREX may be used by different brokers , but they all will be much the same in the way they work. Learn the various types of orders and become accustomed to them to enable you to make the right decisions on how to enter and exit the market thereby making your profit or loss.


Different Types of Orders
• Market Order
• Limit Order
• Stop-Loss Order
• Limit Entry Order
• Stop-Entry Order
• OCO Order
• GTC Order



Market Orders
A Market Order is the simplest type of order It is simply an order to buy or sell a currency at the current market price. A trader places a market order by stating the currency pair he wants to trade, as well as the number of lots he wishes to trade.
You may use the market order to enter a new position (buy or sell) or to exit an existing position (buy or sell).

This is an order where the second your order is processed you buy or sell a currency pair at the market price. The order is instant and this means that the current price quoted at the exact time of the click will be given to the customer. Using the phone is much the same but takes a few seconds longer.
This means you are buying one currency and at the same time selling a different currency. A market order is the most common order used in day trading.


Limit Orders
Limit Order – is an order to buy or sell at a certain limit or specific price. It turns into a market order when that specific price level is reached. They can be used to buy currency below the market price or sell currency above the market price. When buying, your order is executed when the market falls to your limit order price. The limit order is based on price and duration. When selling, your order is executed when the market rises to your limit order price.
As an example if a currency is worth at the current moment, $5, and you have a limit order in place for $4, the limit order will not come into effect until the currency drops to $4. This when the transaction will take place – at $4.


Stop Loss Orders
Stop Loss order - A stop loss order is an order where an open position is automatically liquidated at a specific price. If someone wants to learn forex, stop loss order is very important as this order protects you against sudden movements in the currency markets. Essentially this is a protection for the trading account against an adverse movement in the exchange rate. The stop loss order is in effect until the currency is sold or the stop loss order is cancelled by the client

The main difference between a limit order and a stop loss order is that stop loss orders are ordinarily used to limit a loss position on a transaction whilst limit orders are used to enter the market.
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Limit Entry Orders
A Limit Entry Order means you state a certain value at which you wish to buy/sell, just as in regular limit orders. The difference is that the buying or selling is executed only when the exchange rate reaches, but does not break the specific level you decided upon.
As an example if a currency is $5, and you specify a limit entry order of $6, but the currency keeps rising in value to $7, this transaction will not be executed. If the same currency drops after reaching $6 the transaction will take place.



Stop Entry Order
For example, if you want to buy a particular currency, but not until the price drops to $5 you would place an entry-limit buy order at $5. If the price never drops to that level, then the order will remain unexecuted, but it will remain a pending order until you cancel it


OCO
OCO Order – one cancels other. It is an order that is a mixture of two limit and/or stop orders. Two orders with price and duration variables are placed above and below the current price. An order placed so as to take advantage of price movement, which comprises of both a stop and a limit price. When one level is attained, one half of the order will be executed (either the stop or limit) and the left order canceled (either stop or limit). Your position would be locked in if the market moved to either the stop rate or the limit rate, and as such would close your trade while at the same time, cancelling the other entry order. This order can be done without the need for monitoring the market.
This is also known as OCO – order cancels other.



GTC
Good 'Till Cancelled Order (GTC) - An order to buy or sell at a specified price.
An abbreviation of 'Good till Cancelled'. This is a no time limit order, which should keep working , unless the customer decides to cancel the order. This is an instruction to a broker that unlike normal practice the order does not expire at the end of the trading day, although normally terminates at the end of the trading month. A buy or sell order which remains open until it is filled or canceled.



VARIATIONS
GFD –Good for the Day
Entry Order
Buy Limit Order
If Done Order
Sell Limit Order
Stop Order
Buy Stop Order
Sell Stop Order
Protective Stop Order
Take Profit Orders
Trailing Stop or a Ratchet Stop
Position order
Take Profit Orders