Trade Orders – Forex Academy

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.

What is a pending Forex order? When we start trading in Forex, we use what is known as “market order” to participate. Just click on the button to sell or buy and you’re trading. The market order is telling the broker that he wants to get involved at the best possible price, or what is known as “market price”. There are no guarantees that you will have the price you see in the box or in the order window, but as Forex is extraordinarily liquid, most of the time it works.

Pending Orders

Pending orders on the foreign exchange market, or in other markets, are a set of instructions that you give to your broker when entering or leaving a position. Sometimes, with more complex trading platforms, you can have several actions in the same order. At its most basic level, it is looking at a scenario in which it is telling the market that it wants to enter or exit a position at an exact price. If the market does not reach that exact price, in this situation nothing will happen. There are several types of orders, but they will analyze the most basic ones that are most likely to be found.

Buy Stops

A purchase stop simply tells the agent that he wants to buy a couple of currencies at a specific price. For example, if you do not have the USD/CAD pair at 1.31, but you acknowledge that you are in the wrong position if the market reaches the level of 1.3180, you place a purchase limit at that price level to protect your account. This means as soon as the market reaches 1.3180, it will buy back the position to close trade and live to fight another day.

Selling Stops

The sales stops, of course, are exactly the opposite. If a price is touched, you want to sell the market, usually to close a position. Using an example of the GBPUSD pair, let’s say you are long at 1.30, and the price has traveled up to the level of 1.33. You want to ensure some profits, so you decide to place a point of sale at 1.3270 just below. If the market returns to the level of 1.3270, you sell your position and flatten the account, at least as long as the transaction is concerned.

Shopping to the Limit

A purchase limit is an order that says you are willing to buy a currency pair at a specific price or higher. A good example is if you want to buy the pair USD/JPY at 111.15, which is now the cheaper price than the market. As the market falls to the level of 111.15, you are only willing to buy it at that specific price, or better. It is possible to fill it at a lower price as is said to be “better”, but this is very strange to happen and always in a situation where there is a big slide during the news event. If your price is not affected, then nothing happens. You will pay 111.05 or less for the position.

Limit of the Sale

Clearly, this is the exact opposite of a limit purchase order, as it is setting a specific price you are looking to sell this pair of currencies. For example, the EURUSD pair is currently traded at the level of 1.1358, and recognizes that the level of 1.12 above is an area of resistance. You’re willing to shorten the market if you get up in that area, and you’re only willing to pay that price. You set a sales limit at that level and can complete your operation at that price or more to take advantage of the “best” part of the transaction.

Why Not Use Market Orders?

Of course, we are all guilty of this, but you should never use market orders if you can help it. This invites a slide that can cause major problems. On many occasions, it is not an alarming concern, but it can happen. And beyond that, if it slips, there’s no recourse. You can’t call your agent and complain about the slip and hope to get a reaction in our favor. With a price limit order in this situation, you have any say in the matter.