TYPES OF TRADING ORDERS AND HOW TO USE THEM
Pending orders
Somewhere you can find the term as "Deferred orders".
These are orders that will be filled in the future, once a certain condition is met.
Most often this condition is reaching a certain market price.
The most popular pending orders are Stop and Limit!
Both types of orders become market orders when the initially set price is reached.
The difference between them is that Stop Orders can be activated at a worse price than the set price, depending on market conditions.
Limit orders cannot be activated at a price lower than the set price, the price must be either equal to the set price or even more advantageous.
Depending on the purposes of the trade, different deferred orders are used.
A breakout of a level is traded with a Stop order
A pullback from a level is traded with Limit order.
The types of Pending Orders are:
and other.
Market order
This is an order where you enter a trade, regardless of buy or sell, which is executed at the current best price.
For example, if you want to buy GBP/USD, you click directly on the corresponding button and the trading platform automatically places the deal on the market.
When you click on the "Sell" or "Buy" button, you actually place a market order.
Keep in mind that depending on market conditions, there may be some difference between the price you see and the price at which the order will be executed.
Stop Forex orders - Buy Stop and Sell Stop
The Stop orders to enter a deal are different from the Stop Loss order to limit the loss!
Buy Stop order is used when you want to buy at a level higher than the current market price.
It is placed higher than the level at which the price is currently.
Sell Stop order is used when you want to sell at a level lower than the current market price.
It is set lower than the current price level.
For example, EUR/USD is currently trading at a price of 1.1860, you think that if it reaches a price of 1.1960 it will continue to move in an uptrend.
In this situation you have two options:
*To sit in front of the screen waiting for price to reach 1,1960 so you can buy, or;
To place a Buy Stop order at the 1,1960 level.
However, if you think that the price will fall in the coming periods, instead of staying at the computer and wait for a convenient time to sell, you can place a Sell Stop order at a level lower than the current market price - on the chart 1.1760.
Limit Forex orders / Buy limit and Sell Limit
Buy Limit order is used when you want to buy at a level lower than the current market price.
It is set lower than the current price level.
Sell Limit order is used when you want to sell at a level higher than the current market price.
It is placed higher than the level at which the price is currently.
For example, EUR/USD is currently trading at a price of 1.1860, you think that if it reaches a price of 1.1960 it will bounce off the level and go into a downtrend.
In this situation you have two options:
**To sit in front of the screen waiting for price to reach 1,1960 so you can sell, or;
*To place a Sell Limit order at the 1,1960 level.
However, if you think that the price will fall in the following periods and then rise, instead of you sitting at the computer and wait for a convenient time to buy, you can place an order to buy a limit below the current market price - on chart 1,1760.
Above is a summary chart of the orders and where they are placed.
Let’s summarise:
OCO orders / One Cancels The Other
The OCO order is a combination of two orders to enter into a trade.
One order is placed above the current market price and the other below the current market price.
When one of the orders is reached, it is executed and the other one is automatically deleted from the trading platform.
For example, EUR/USD is currently trading at 1.1850.
You expect great volatility in the market and you do not want to miss the movement.
In this case you place an OCO Forex order at the level of 1.1880 (above the market price) in anticipation of an upside move and at the level of 1.1820 (below the market price) in case the price goes down.
When the market reaches 1.1880, you will buy EUR/USD at this level, and the order placed at 1.1820 will be deleted from the trading platform.
OTO orders / One Triggers The Other
OTO allows the trader to place two orders simultaneously, the second one being activated after the first one.
This type of order allows many different combinations.
For example, a buy order can be placed at a pre-set price, above the current one (Buy Stop) and a second order can be placed together with it to limit the loss from the buy order, in case the price goes in the opposite direction.
In this case, the loss limit order will only be activated if the buy order is activated.
The orders described so far are for entering into a trade, but you must also exit the trades.
This is done by using “Stop Loss” and “Take Profit”.
Trailing stop
Trailing stop is an order to limit the loss, which moves along with the market price.
It can be said that this is a moving Stop Loss.
And here is how to do it!
Suppose you want to buy GBP/USD at a price of 1.2820.
You place a trailing stop at a distance of 20 pips at a price of 1.2800.
When the price goes in your direction and reaches the level of 1.2840, then the trailing stop will move by 20 pips or at the level of the entrance to the transaction.
Then if the price reaches the level of 1.2860, then the trailing stop will move to the level of 1.2840.
Keep in mind that if the price returns from 1.2860 to 1.2850, the trailing stop will NOT go down to 1.2830, but it will remain at 1.2840.
If it was to move down back with the price, it makes no sense, because it will never be reached and will not be able to limit the loss of the deal.
And then you will find out first hand what Margin Call and Stop Out is!
Another important feature to keep in mind is that the trailing stop is only active if the trading platform is active.
If the platform is closed, then you do not have a Stop Loss order at all!
Conclusion
These are the most frequently used orders on the Forex market and they are totally enough, there is no need to complicate trading.
Before you start trading live, get familiar with the conditions of the broker regarding the orders.
Make sure that you understand them and that you can use them correctly.
The best teacher remains the practice, therefore, open a demo account and test the capabilities of the platform.
👍 Please support this tutorial with like and comment so we can help more people together.
Thank you in advance! 🙏
Somewhere you can find the term as "Deferred orders".
These are orders that will be filled in the future, once a certain condition is met.
Most often this condition is reaching a certain market price.
The most popular pending orders are Stop and Limit!
Both types of orders become market orders when the initially set price is reached.
The difference between them is that Stop Orders can be activated at a worse price than the set price, depending on market conditions.
Limit orders cannot be activated at a price lower than the set price, the price must be either equal to the set price or even more advantageous.
Depending on the purposes of the trade, different deferred orders are used.
A breakout of a level is traded with a Stop order
A pullback from a level is traded with Limit order.
The types of Pending Orders are:
- Buy Limit;
- Sell Limit;
- Buy Stop;
- Sell Stop;
- OTO;
- OCO;
and other.
Market order
This is an order where you enter a trade, regardless of buy or sell, which is executed at the current best price.
For example, if you want to buy GBP/USD, you click directly on the corresponding button and the trading platform automatically places the deal on the market.
When you click on the "Sell" or "Buy" button, you actually place a market order.
Keep in mind that depending on market conditions, there may be some difference between the price you see and the price at which the order will be executed.
Stop Forex orders - Buy Stop and Sell Stop
The Stop orders to enter a deal are different from the Stop Loss order to limit the loss!
Buy Stop order is used when you want to buy at a level higher than the current market price.
It is placed higher than the level at which the price is currently.
Sell Stop order is used when you want to sell at a level lower than the current market price.
It is set lower than the current price level.
For example, EUR/USD is currently trading at a price of 1.1860, you think that if it reaches a price of 1.1960 it will continue to move in an uptrend.
In this situation you have two options:
*To sit in front of the screen waiting for price to reach 1,1960 so you can buy, or;
To place a Buy Stop order at the 1,1960 level.
However, if you think that the price will fall in the coming periods, instead of staying at the computer and wait for a convenient time to sell, you can place a Sell Stop order at a level lower than the current market price - on the chart 1.1760.
Limit Forex orders / Buy limit and Sell Limit
Buy Limit order is used when you want to buy at a level lower than the current market price.
It is set lower than the current price level.
Sell Limit order is used when you want to sell at a level higher than the current market price.
It is placed higher than the level at which the price is currently.
For example, EUR/USD is currently trading at a price of 1.1860, you think that if it reaches a price of 1.1960 it will bounce off the level and go into a downtrend.
In this situation you have two options:
**To sit in front of the screen waiting for price to reach 1,1960 so you can sell, or;
*To place a Sell Limit order at the 1,1960 level.
However, if you think that the price will fall in the following periods and then rise, instead of you sitting at the computer and wait for a convenient time to buy, you can place an order to buy a limit below the current market price - on chart 1,1760.
Above is a summary chart of the orders and where they are placed.
Let’s summarise:
- Buy Limit - pending buy order placed at a price lower than the current one;
- Buy Stop - pending buy order placed at a price higher than the current one;
- Sell Limit - pending sell order placed at a price higher than the current one;
- Sell Stop - pending sale order placed at a price higher than the current one;
OCO orders / One Cancels The Other
The OCO order is a combination of two orders to enter into a trade.
One order is placed above the current market price and the other below the current market price.
When one of the orders is reached, it is executed and the other one is automatically deleted from the trading platform.
For example, EUR/USD is currently trading at 1.1850.
You expect great volatility in the market and you do not want to miss the movement.
In this case you place an OCO Forex order at the level of 1.1880 (above the market price) in anticipation of an upside move and at the level of 1.1820 (below the market price) in case the price goes down.
When the market reaches 1.1880, you will buy EUR/USD at this level, and the order placed at 1.1820 will be deleted from the trading platform.
OTO orders / One Triggers The Other
OTO allows the trader to place two orders simultaneously, the second one being activated after the first one.
This type of order allows many different combinations.
For example, a buy order can be placed at a pre-set price, above the current one (Buy Stop) and a second order can be placed together with it to limit the loss from the buy order, in case the price goes in the opposite direction.
In this case, the loss limit order will only be activated if the buy order is activated.
The orders described so far are for entering into a trade, but you must also exit the trades.
This is done by using “Stop Loss” and “Take Profit”.
Trailing stop
Trailing stop is an order to limit the loss, which moves along with the market price.
It can be said that this is a moving Stop Loss.
And here is how to do it!
Suppose you want to buy GBP/USD at a price of 1.2820.
You place a trailing stop at a distance of 20 pips at a price of 1.2800.
When the price goes in your direction and reaches the level of 1.2840, then the trailing stop will move by 20 pips or at the level of the entrance to the transaction.
Then if the price reaches the level of 1.2860, then the trailing stop will move to the level of 1.2840.
Keep in mind that if the price returns from 1.2860 to 1.2850, the trailing stop will NOT go down to 1.2830, but it will remain at 1.2840.
If it was to move down back with the price, it makes no sense, because it will never be reached and will not be able to limit the loss of the deal.
And then you will find out first hand what Margin Call and Stop Out is!
Another important feature to keep in mind is that the trailing stop is only active if the trading platform is active.
If the platform is closed, then you do not have a Stop Loss order at all!
Conclusion
These are the most frequently used orders on the Forex market and they are totally enough, there is no need to complicate trading.
Before you start trading live, get familiar with the conditions of the broker regarding the orders.
Make sure that you understand them and that you can use them correctly.
The best teacher remains the practice, therefore, open a demo account and test the capabilities of the platform.
👍 Please support this tutorial with like and comment so we can help more people together.
Thank you in advance! 🙏
✅ JOIN FREE TELEGRAM: t.me/trendlinefreetrade
❓ If you got questions: t.me/Semkov
💰 PAID SIGNALS AND ANALYSIS: t.me/Semkov
💡 If you want to know on what basis we make our entries, get in here: t.me/trendlinefreetrade
❓ If you got questions: t.me/Semkov
💰 PAID SIGNALS AND ANALYSIS: t.me/Semkov
💡 If you want to know on what basis we make our entries, get in here: t.me/trendlinefreetrade
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.