You may have observed that several publications and articles that serve as trading guides initially start their discussions with the question ” What is Forex Trading?” At the same time, you may probably have observed that the answers that they provide to such questions just proves that the forex industry is a vast field and because of this, it requires continuous learning in order to become an expert trader. Today, we aim to give you a very important concept which when mastered will help save you from frequent losses.
Forex Orders Explained
Similar to dining in a restaurant, forex trading requires you to provide instructions or orders to your trading platform’s system so as to obtain your goal in a particular trading session. In a technical sense, an order is a trading jargon which means an instruction on how you will enter or leave a market. Though the previous statement is the general definition of an order, the concept of placing an order is also applicable when you decide which currency pair to buy/sel, you go long or short trading, you decide on the rate as well as the quantity of the currency that you will buy or sell. Overall, any action, decision or instruction that you input in the system is regarded as an order.
5 Types of order
Trading via online platforms involves actions that concern one, two or even a combination of these 5 types of order.
This is one of the most common types of order that is executed by a trader. Explaining further, a market order is action done when you decide to purchase a currency at a desirable rate. In a real life scenario, a market order is very similar to the clicking of the “buy now” button on online selling applications. The only difference is that market order allows you to immediately purchase a currency instead of appliances or gadgets.
2. Limit order
With its name alone this type or execution is done when you wish to set a boundary for purchasing or selling your currencies. You can have two choices for this action. It is either you buy a currency below the market or sell above the market with rates that are based on your own decision. Normally, the limit order has an alarm or notification. Once set on a specific limit, the system automatically does its assigned task when the market reaches its limit rate.
3. Stop entry order
This command dictates the system to stop orders until your desired rate is obtained. If you wish to buy a currency after a rate increase or sell after a rate drops then you have to learn how to trigger the stop entry order in your platform.
4. Stop loss order
This is one of the most interesting orders that you can do to save your account from losing everything that you have earned. A stop loss order is a command that is executed when a trader foresees a possible rate that may lead to losing. Such an order is applicable to both long and short traders. If you are into long positions the sell stop order will save you. Otherwise, you can use your buy stop orders.
In your quest for the answer to “What is Forex Trading?” It is a must to have awareness of the various types of orders because this will help you make the most of your trading platform application then eventually help you gain more profit.