Market Orders – Forex Academy

Above the market is an order type that executes above the current market prices or we can say order triggers in the future at the desired price we set. For, E.g., EURJPY is in a downtrend, and prices hovering around 132.50. Well, you believe that if the price action goes below the 130 Major level, then the asset is off the races.

Unfortunately, you are doing a 9 to 5 job, and trading is your part-time business and you are unable to watch the market the whole day. Therefore you place the order to automatically sell five lots of EURJPY once the prices can go beyond 130. At this point in the game, one of the two things happened. If the prices go below 130, your order will be a trigger. If the price action failed to cross the 130 major levels, your order is never executed. We have covered the basics here now let’s dig a little further.

TYPE OF ORDERS ABOVE THE MARKET

BUY STOP ORDER

Buy stop order is the order price that you set above the current market price to buy. If you place a buy stop order, then your broker will automatically trigger your order once the price is reached. No one knows at what price your order will fill; it should be close to your buy stop order price. Most traders use the buy stop orders to open a long position on a breakout or to close a short position that is going against you.

SELL LIMIT ORDER

The sell limit order is also above the market order. Here you believe that the market will run to a specific level and then it fails to move further and sooner we going to experience a downtrend. Therefore you are looking to open a short position at a significant level. Assume there is a significant resistance level at 130 levels in the EURJPY pair and you set the sell limit order because you believe when the prices hit this level, we will witness a downtrend.

TRADING STRATEGIES FOR USING THE ABOVE THE MARKET ORDERS

BUY STOP ORDERS AND SYMMETRICAL TRIANGLE

Buy stop order works very well in bullish chart patterns. Here in this strategy, we are using the symmetrical triangle to trigger the buy stop order by connecting two lower high and higher low draw the symmetrical triangle on the price chart, and place the buy stop order outside the symmetrical pattern. Your buy order will be trigger when the price action breaks the pattern. Place the stop loss order below the pattern and go for a brand new higher high.

The image below represents the symmetrical triangle chart pattern on the AUDUSD forex pair. The blue arrow was the area where you should place the buy stop order. After the breakout when the price action triggered the buy stop order, the stop loss should be placed below the resistance line of the pattern. The resistance line acts as dynamic support to the price action, which helps the traders to stay in a trade and always choose the brand new higher high for the take profit.

HIGHER HIGH BREAKOUT TRADES

The buy stop order is efficient for trading the trending market conditions. Find out the trending market, wait for the price action to print brand new higher high, after the brand new higher high let the price action to pull back enough and place the buy stop order above the most recent higher high. Wait for the prices to break the most recent higher to trigger your order. Most of the time, when price action breaks the recent higher high, it is a very high likelihood that the prices will continue more elevated in the same direction. No one knows how much the price action goes higher after the breakout, but it is advisable to close your trade when the price action approach to the significant resistance level.

The image below represents the buying trade in the GBPAUD forex pair. The currency was in an uptrend, and after the pullback, it breaks above the most recent higher high. After the breakout, our buy stop order was triggered, and we choose to go for the brand new higher high.

USING THE SELL LIMIT ORDER TO TRADE THE BREAKDOWNS

The sell limit order is useful to trade the downtrend markets. Look for the downtrend markets, wait for the pullback to happen, and place the sell limit order below the most recent lower low. Wait for the prices to break the most recent lower low to activate your sell limit order. On the left side of the chart looks for the significant level to close your selling position. The stop-loss order should be above the most recent lower low.

The below image represents the downtrend on a GBPCAD forex pair. As you can see around the 22^nd of May, we witnessed the lower low in the pair. As the price action pulled back enough, it starts to roll over again and breaks the most recent lower low. At the break of the lower low, we choose to put the sell limit order and sooner market triggered our order, and we witnessed the brand new lower low.

SELL LIMIT ORDER AND BEARISH TREND

Find out the trending lower asset, which keeps approaches the timeframe support area. At those stages of the market, you will witness that the selling trend has a hard time to print lower low because buying pressure of the main level affecting the prices, but overall sellers are still in control. After the number of corrective moves draws a downtrend line across this resistance line. Place the sell limit order at the downtrend line in anticipation for the price to roll over and continue its downtrend.

The image below represents the selling trades in the GBPCAD forex pair. The pair was firmly in a downtrend, and when the prices approached the major support area, we witnessed some strong buying moves. Each buying move was printing the lower high, and we used that lower high to activate our sell limit orders. In total, we took three trades with the stop loss above the trend line, and for booking profit, we choose the brand new lower low.

CONCLUSION

To trade above the market means to place the order at the desired price, which will trigger automatically. There are two types of above the market orders.

BUY STOP – Buy the asset when the price action approached your desire price in an uptrend.
2. SELL LIMIT – Sell the ASSET when the price action approached the desired price in a downtrend.

The above the market orders are beneficial and convenient ways for part and full-time traders. Even part-time traders use these orders to execute their trades. Align your trading strategies with the above the market type orders to make some serious money from the market.

While some traders prefer to work with a financial advisor who invests on their behalf, other traders choose to take a ‘do it yourself’ approach, buying and selling their own shares or trading. That’s probably why you’re on the professional trader website.

However, as you know if you’ve ever tried to buy shares, there are different varieties of stock order types. Some orders are executed immediately; others are executed only at a specific time or price, and others have additional conditions.

The type of order used can make a big difference in the price you pay and the returns you get, so it is important to be familiar with the different types of orders in the financial markets.

Order to the Market

A market order is when an investor to trader requests an execution in the act of the sale or purchase of an asset. While this order guarantees the execution of the order, it does not guarantee the execution price. It will usually be executed at the current purchase (sale) or sale (purchase) price. Investors can give simple or complex market order instructions, which can be accessed by brokers or banks they use to trade.

When executing an order to market, traders have no control over the final price. The execution of the order to market is correlated with the availability of sellers and buyers. Depending on the pace of the financial market, the price sold or paid can vary dramatically from the quoted price. It is also possible to divide market orders. The division of market orders can lead to multiple price points, due to the involvement of several traders in the transaction.

Limited Order

If you want to execute an order at a specific price, you must use a limited order. With a limited order, you will determine a certain price for which you want to buy or sell a value. The order is only executed when it has a buyer or seller who will pay or sell a number of assets for that price.

A limited purchase order is only executed at the limit price or below ( if, below).

Let’s take an example, if a trader wants to buy Apple Inc. for a price not exceeding $200 per share, the investor will make a limited order. Once the share price reaches $200, the order is executed. Although a limited-sale order is similar, it is only executed when the shares reach or exceed the limit price.

Limited sales orders may also have additional requirements such as Fill or Kill (FOK) or All or none’ (AON).

When a FOK is requested, the order is executed immediately or killed completely.

With an AON request, the order is executed or not executed at all. If the order is not complete, the request will remain pending until the order is completed.

This is a brokers’ market makers, that is to say, ALL brokers using Metatrader (that do not tell you stories of liquid suppliers and milongas, at the end of the chain there is a market maker), makes no sense. But I use futures or stocks and ETFs, it is basic in a trading strategy, especially when you make money allocation being CTA. You can’t buy futures from 20 customers and 30 can’t. Can I explain? Or all or none.

GTD (Good till date)

If you want to indicate the amount of time an order remains active, you will want to use a period of validity of the order. For example, a valid daily order (GFD) is an order in which the investor wishes to sell or buy insurance for a certain period of time. Once the trader requests the order, it will expire shortly thereafter during the day. These orders will only be valid during the day they are requested. If current orders are not executed during the day, they are canceled at the end of the trading day.

Investors can also request the cancellation of the order until the deadline is met, which requires certain cancellation criteria to continue indefinitely. Another request option is immediate or a cancel order (IOC) that executes or cancels the order instantly.

Conditional Orders of Exchange

Conditional orders allow investors to set the parameters that trigger execution. These options focus on the movement of prices of securities, forex, CFDs, indices, and other options contracts.

An investor can select trigger values, types of securities, and time limits for the execution of his orders. Now we present some of the most common conditions stock market orders that can be used in trading.

Order Stop Loss

The purpose of a suspension order is to limit the trader’s loss in a transaction. Traders usually apply for “BUY STOP” orders to limit their losses or protect their profits if they have put a short deal. Traders can use a stop-sale order to minimize their loss or protect a profit if they have a SELL STOP.

Some of the most common stop-loss commands include:

Stop Selling Order: The instructions for stop selling orders are to sell at the best available price, once the price falls beyond the stop-loss price.

Purchase Stop Order: Similar to the sale stop order, the purchase stop order is a safeguard to limit a loss. If a trader makes a short, you may want to place a stop purchase order to minimize your loss of earnings.

Trailing stop order: Introducing stop parameters that produce a mobile or drag price is a stop trailing order. Stop Trailing orders can maximize profit when prices increase and decrease significantly loss when prices fall. I don’t like them, but they are.

A purchase order at the market price if touched is an order that requests a purchase at the best available price, or at the “if touched” level. This order is the famous MIT ( Market if Touch) If the price of the value falls at this level, the order will become a market purchase order. While with a market order if touched, the sale occurs when a buyer wants to pay the level of ‘if touched’.

These types of orders are widely used in range break trading, where you enter the market at a high price if a certain value is exceeded. The same but the other way around, but on the short side.

An Order Cancels Other Orders

Investors can use an OCO command when they want to capitalize on one of the two trading options. For example, if an investor wishes to trade shares of ABC at 10 euros per share or shares of XYZ at 50 euros per share, the one who reaches the designated price first will be the one who occurs. Thus, if ABC shares reach 10 euros per share, the order is executed and the order for XYZ shares is canceled.

A bear command is when an investor wishes to send another order once his previous order has been completed. Let’s take an example, if a trader wants to buy ABC shares for 10 euros per share and then wants to place a sales order and make a profit, he would need to complete a two-part order. The first part is a limited order for the purchase of ABC shares at 10 euros per share. The second part would be to sell ABC’s shares at EUR 11 per share. Multiple commands enter the system simultaneously and then run sequentially.

Orders Sensitive to Tick

A tick-sensitive command is an order that is conditional on a tick going up or down. Traders can enter such orders in futures brokers such as Interactive Brokers. An example of this order would be to buy at a downtick at the opening price of the s&P 500 futures.

Conclusion

Before you start trading forex, stocks, futures, or whatever, it’s important to understand the vocabulary of the investment world. Perhaps no jargon is more important than the one surrounding the different types of orders, so I hope I helped you.