The Very Basics Of Forex - Types Of Orders

Foreign exchange market participants are able to use several types of orders for purchase of foreign currency, which gives them considerable flexibility in planning marketing strategies. Moreover, the range of orders allows traders to increase their profits and at the same time to reduce or limit the potential losses. In the following article we present four basic types of contracts offered by almost every broker. Market order Market order is considered the simplest form of contract. This type of contract is buying or selling of a currency that is executed at the best market price at the time of posting. Of market orders executed without delay and / or discrepancies is guaranteed almost 100% due to the nature of the currency market, namely high liquidity. Limit order Limit order is an order to buy or sell a currency that allows traders to pre-determine the price of entry or exit. In other words, investors set the price at which to automatically take your profits and get out of a position. For example, if you bought EUR / USD at 1.4038 price you could run a limit order at a price of 1.4051. If the price reaches the desired level position will be automatically closed by your broker and you will receive your winnings. Stop-Loss Order Stop-Loss order is a limit order used for the purchase / sale of foreign currency when the price reaches a predetermined level. The purpose of its use to determine the maximum loss that an investor can tolerate. Returning to the example of section 2 you can use stop-loss order at a price of 1.4018, thereby to limit your loss to 20 pips in protovopolozhno any market movement. One Cancels the Other Order This type order is a combination of limited and "Stop-Loss" orders, which are applied simultaneously and the execution of either automatically cancels the other.

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