Basic Forex Education_7. Types of Forex Orders

Lesson 7: Types of Forex Orders

An order is an instruction from trader to broker that shows how the trader
wants to enter or exit the market. Here are some of the most common tabs of orders:
A market order is an order to buy or sell immediately at the best available price.
This type of order guarantees that the order will be executed. Just remember that in
a fast-moving market, the price paid or received may be quite different from the last
price quoted before the order was entered.

A limit order is an order to buy or sell at a specific price. A buy limit is an order
to buy at the limit price. This price will always be below the current market price.
Let’s take a look at this example: the Trader wants to buy EUR/USD but he is only
ready to buy if he can do it more cheaply.

A sell limit is an order to sell at the limit price. This price will always be above the
current market price: the Trader wants to sell - but only if he can sell at a price higher
than the market price.

A stop-loss order is an order to buy or sell once the price reaches a specified
price. It’s designed to prevent additional losses if the pricing goes against you. It is
the most important order of all.

Consider that you have purchased EUR/USD at 1.3000 and you realize that you
made a wrong move, which is a common case. When the prices start to fall, you
place a stop-loss order at 1.2980 and when the price touches this value, your
broker will close the position automatically, which contains your loss to 20 PIPs.
If you had not set your stop-loss, the price could have continued falling until you
lost all the money. You wouldn’t want that - right? So, always use your stop-loss
orders.