LEARN BASICS OF ORDER TYPES
A market order is an order to buy or sell at the best available price. For example, the bid price for EUR/USD is currently at 1.2140 and the ask price is at 1.2142. If you wanted to buy EUR/USD at market, then it would be sold to you at the ask price of 1.2142. You would click buy and your trading platform would instantly execute a buy order at that exact price.
Limit Entry Order
A limit entry is an order placed to either buy below the market or sell above the market at a certain price. For example, EUR/USD is currently trading at 1.2050. You want to go short if the price reaches 1.2070. You can either sit in front of your monitor and wait for it to hit 1.2070 (at which point you would click a sell market order). Or you can set a sell limit order at 1.2070 which in this case, If the price goes up to 1.2070, your trading platform will automatically execute a sell order at the best available price.You use this type of entry order when you believe price will reverse upon hitting the price you specified!
Stop Entry Order
A stop entry order is an order placed to buy above the market or sell below the market at a certain price. For example, EUR/USD is currently trading at 1.5050 and is heading upward. You believe that price will continue in this direction if it hits 1.5060. You use stop entry orders when you feel that price will move in one direction!
Stop Loss Order
A stop loss order is a type of order linked to a trade for the purpose of preventing additional losses if the price goes against you.
- If you are in a long position, it is a sell STOP order.
- If you are in a short position, it is a buy STOP order.
REMEMBER THIS TYPE OF ORDER.
A stop loss order remains in effect until the position is liquidated or you cancel the stop loss order. For example, you went long (buy) EUR/USD at 1.2230. To limit your maximum loss, you set a stop-loss order at 1.2200. This means if you were dead wrong and EUR/USD drops to 1.2200 instead of moving up, your trading platform would automatically execute a sell order at 1.2200 the best available price and close out your position for a 30-pip loss.
Once you have familiarised yourself with the information and concepts, you can open a Demo Trading Account to practice what you have learnt and build on your knowledge and understanding of how to trade successfully. Treat your demo account as you would your real account.