setting forex orders

Trading manual part 10: types of Trading orders

Different types of Forex and CFD  orders:

When trading the Forex and CFD market, there are different options to open and close your
positions (automatically). We usually call this ‘orders’.

types of orders forex and CFD

Market orders:

> A market order is executed immediately when placed. It is priced using the
current spot or market price. –

> A market order immediately becomes an open position and subject to
fluctuations in the market.

> This means that should the rate move against you, the value of your positions
deteriorates. This is an unrealized loss.

> If you were to close the position at this point, you would realize the loss and
your account balance would be updated to include the revised totals.

Limit orders:

> A limit order is an order to buy or sell a currency pair, but only when certain
conditions included in the original trade instructions are fulfilled.

> Until these conditions are met, the order is considered a pending order and
does not affect your account totals or margin calculation.

> The most common use of a pending order is to create an order that is
executed automatically if the exchange rate reaches a certain level.

For example, if you believe that EUR/USD is about to begin an upswing, you
could enter a limit buy order at a price slightly above the market rate. If the
rate does move upwards as you predicted and reaches your limit price, a buy
order is executed with no further input on your part.

Profit order

Take-Profit Orders:

> A take-profit order automatically closes an open order when the exchange rate
reaches the specified threshold.

> Take-profit orders are used to lock-in profits when you are unavailable to
monitor your open positions.

For example, if you are long on USD/JPY at 109.58 and you want to take profit
at 110.00, you can set this rate as your take-profit target. If the bid price
touches 110.00, the open position is closed by the system and your profit will
be locked in.

Your trade is closed at the current market rate. In a fast moving market, there
may be a gap between this rate and the rate you set for your take profit.

 

Stop-Loss Orders:

Similar to take-profit, a stop-loss order is a defensive mechanism you can use
to help protect against further losses, including avoiding margin closeouts.

A stop-loss automatically closes an open position when the exchange rate
moves against you and reaches the level you specify.

For example, if you are long on USD/JPY at 109.58 you could set a stop loss at
107.00. Then, if the bid price falls to this level, the trade automatically closed,
thereby capping your losses.

It is important to understand that stop-loss orders can only restrict losses, they
cannot prevent losses.

Your trade is closed at the current market rate. In a fast moving market, there
may be a gap between this rate and the rate you set for your stop-loss.

lfyour stop-loss is triggered when trading resumes on Sunday, your trade is
executed at the current market rate, which may be lower than your stop-loss
rate — Resulting in additional losses.

It is in your best interest to include stop-loss instructions for your open
positions. Think of them as a very basic form of account insurance.

Trailing Stop Orders:

Similar to a stop-loss, a trailing stop can be used to restrict losses and avoid
margin closeouts.

A trailing stop resembles a stop-loss in that it automatically closes the trade if
the market moves in an unfavourable direction by a specified distance.

The key feature of a trailing stop is that as long as the market price moves in a
favourable direction, the trigger price automatically follows the market price
at a specified distance.

This allows your trade to gain in value while reducing the amount of loss you
are at risk for.

Sell (short) & Buy (long):

Basically, these are the two terms that matters in trading Forex. The whole idea is to
buy low and sell high. When you are selling a certain currency pair, you are basically
buying the quote currency and selling the base currency.

Big ben financial time

Market hours:

The market hours are the times when the Forex market is open, and when there are
certain trading sessions active. As mentioned before, the Forex market is open 24
hours a day and 5 days a week. There are 4 major trading sessions. The London
session, The New York session, The Sydney session and the Tokyo session. The most
market movement can be found in the US session (New York) and the UK session
(London).

 

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