Market Orders

A market order is an order of execution of trade. Traders can either buy it or sell it at a best available price.

Limit Orders

When it comes to Forex order types, limit orders are known as Take Profit and Stop Loss.  Take Profit is simply the limit a client opts for over the rate at which he buys or under the rate at which he wants to sell. This leads to a direct closure of a transaction just so the desired profits are gained.

Stop Loss on the other hand is the limit a trader can opt for that si under the rate at which that person buys and over the rate at which he is selling it. So that there are less chances of a loss, a Stop Loss involves automatically closing the transaction from the trading system.

Most traders work with special consideration to these. Limit orders are present to ensure that a transaction is given the attention that it requires.

If for example you have the leverage of 1: 100, you buy the currency pair USD/CAD. The Lot size you have picked here is 1.0 which translates into 100,000 USD. The margin requirement is 1% which equals 1000 USD. Furthermore the buying rate stands at 1.4041. Here you are losing 91 pips in order get 59 pips.

When you use the calculated formula for USD/CAD the CAD value for every pip on a $100,000 lot size stands as $10. Therefore the maximum you can lose here with Stop Loss limit is 910 CAD, while the most that you can gain in the form of profits goes up to 590 CAD.

Now what traders must remember here is that once they reach the margin of 1000 USD their trade will be closed and will return to the client’s account. On the other hand Market Execution is one trade involving Current price.

Pending order is the trade you make at a future price with either a limit or stop order. If you plan on choosing Pending Order some of the following choices may be presented to you.

Sell Stop

This is the price level that is more than the placed order’s value. These orders are placed expecting that currency price after reaching a certain level will continue falling.

Sell Limit

This is where the current price level is less than that of the value of a placed order. Orders like this are placed expecting that the currency price once it reaches a specific level will continue falling.

Buy Stop

This is the scenario where current price level is less than the value of the order that has been placed. Orders like this are usually placed expecting that one the currency price reaches a specific level it will keep on rising.

Buy Limit

This is the current level of price. It is higher than the value of the order placed. Orders of this kind are placed in anticipation of the currency price, which would have fallen to a specific level, and will now increase.  

Sell Stop Limit

This is the stop order you place for Sell Limit. As soon as the future bid price reaches the stop level that is mentioned in the Price Field, a Sell Limit order is placed at the same level. The Stop level is less than the Bid Price, with the Stop Limit sum more than the stop level.

Buy Stop Limit

This is a stop order for Buy Limit. As soon as you see the future Ask price reaching a stop level mentioned in the price field, a Buy Limit order is placed with specifications in the Stop Limit price field. This stop level is over the Ask price, with the Stop Limit amount less than that of stop level.

 

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