Types of Forex Orders
Recently, I was invited by a friend to help out the wife on a few matters in Forex After a short tutorial, we identified a trade opportunity and I asked her to open the trade order. What followed was a disaster. She ended up muddling the order and opened three positions on the same currency pair, subjecting her account to 50% risk! Half her capital was in the market. That experience led me to ask around and what I found was astounding. Many retail traders don't have an idea of the Forex orders available and when to use them, and it is for these traders that this lesson is given.
Types of Forex Orders
The types of orders you see on your platform will depend on your trading platform. For this discussion, we will use three platforms: MT4, ActTrader and an ECN platform (cTrader).
These are instant orders to buy or sell at market price. It is used when a trader wants to get into the market immediately.
– On MT4, you simply click the New Order tab at the top pane of the platform and you select Instant Execution in the pop-up order window before selecting Buy or Sell.
On ActTrader, there are two ways to place market orders. You an do this by clicking on the currency in the Instrument Panel or the Order buttons (Sell/Buy) on the top left corner of the platform.
On the cTrader ECN Platform, click on the asset panel on the left. The selected currency pair will be enalarged and you can click on the desired order
These are orders that are set to be triggered when market conditions become more favourable. A trader may decide to use a pending order when he wants to buy at a price that is closer to a support or sell at a point close to the resistance.
Traders can use limit orders when they want to the market in a direction that is opposite to the current market direction. In this case, the trader can use an Buy Limit or Sell Limit order. So if the EURUSD is at 1.3209 and the trader wants to Buy, but feels that the EURUSD will fall to 1.3250 before rising, he can set a Buy Limit order at 1.3250 and then set his stop loss and profit target. If he wants to Sell the EURUSD but feels that the currency pair will move up from its present levels of 1.3147 to about 1.3250 before falling, then he can set a Sell Limit at 1.3250.
Traders use stop orders when they want to join the train after a key level of support or resistance has been breached. So if a trader wants to sell the GBPUSD, but it is currently at 1.6030 and the nearest support is at 1.6005, he may decide to set a Sell Stop at 1.5980 when he is sure that the price will not stall at the support but will break through it.
On MT4, select the New Order tab, then select Pending Orders from the pop-up order box.
On ActTrader, click the Trade tab on the top pane of the platform screen, then select the pending order type of your choice. You can also right-click on either the bid (for Buy) or ask (for Sell) price for the currency pair chosen, in the Instrument Panel and select either Entry Limit or Entry Stop in the drop menu that follows. Enter the price you want to buy or sell the asset in the space provided.
On cTrader, open a chart by right-clicking on the asset from the list of currency pairs listed on the left side of the platform, then right-click on the chart tab or on the chart itself and select the limit or stop order displayed.
Setting Stop Loss and Take Profit Targets
On MT4, all the trader needs to do is to set the Stop Loss and Take Profit price on the pop-up order window before clicking on Buy or Sell or choosing any of the pending order types.
On ActTrader, you can right-click on an open position, and enter the profit target in the space marked “Limit”, and the stop loss in the space marked “Stop”. If you are setting these parameters before trade execution, then right click on the bid or ask price of the chosen asset, select the order type, then check the box marked “Set Predefined Stop/Limit”. Then enter the stop loss and profit target in the spaces marked accordingly.
On cTrader, you can set the profit target and stop loss after opening positions by right-clicking on these positions and setting the prices at which the trade should either be stopped out or capture profits.
So there you have it. Your next trade should be a piece of cake.