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The term order refers how a trader enters or exits the market. There are different order types. Among them are market orders, limit orders, stop entry order, stop-loss order, and trailing-stop. There are others that are considered weird orders. Among them are good for the day order, good- till canceled order, one -cancels –the- other, and finally one-triggers- the –other. All these are different order types and will be thoroughly discussed below.
Market order
This order is mostly used when you want to exit the market almost as soon as you enter. But this order type cannot be used when making trades whose prices change within seconds. Because almost as soon as you place your order the price of the security will change. For example, let’s imagine that the GBP/USD is currently trading with the ask price 1.3131 and has a bid price of 1.3130. If you wanted to instantly have access to the market, then you would have the choice of either buying the GBP/USD at 1.3131 or selling at 1.3130.
Stop entry order
Traders place this order in other to buy above the market or sell below the market at a certain price. For instance, EUR/USD is trading at 1.6250 and is heading upwards. And you believe that this price will continue is this direction if it hits 1.6260. You can then set a stop entry order at 16260.
Limit entry order
Traders also place this type order to buy below the market or sell above the market. Traders use this type of order when they believe the price will reverse upon hitting their specified price. For instance, GBP/USD is currently trading at 1.3431 and you want to go short in case the price reaches 1.3440. You will then set a sell limit order at 1.3440 for the GBP/USD pair. As soon as the price goes up your set price, your trading platform will automatically place a sell order.
Stop-loss order
This type of order is usually linked to trades purposely to stop additional losses in case the price goes against you. You place a sell-stop order when you are in a long position and a buy-stop order when you are in a short position. This is the most important order in my humble opinion because it helps you limit your losses. Since no one can make a profit from every trade they make, the stop-loss order will always come in handy. Losing money on a trade is inevitable so never forget to implement your stop-loss order.
Trailing stop order
This is a type of stop-loss order. It moves as price fluctuates. For instance, if you put a trailing stop order of 20 pips at 80.80 on a currency pair. This means that your stop-loss order is set at 81.00. If the price goes down to 80.60, your trailing stop would be at 80.80.
The weird orders.
Good for the day (GFD)
This type of order stays active until the trading day ends. Since the forex market works 24 hours in a day you need to check the time zone you are in other for it to be very effective.
One- cancels -the -other.
This type of order is a combination of two entry and/ stop losses. This is how it works. Two orders with price and duration variables are placed below and above the current price of the security. One order is canceled when the other is executed.
One-triggers –the-other.
Ths is the opposite of one-cancels-the-other. Traders use one-triggers-the-other order type when they want to set the profit they want to make and stop loss levels ahead of time, long before you start the trade.
Conclusion
Knowing the different types of orders on the forex market very important aspect of forex trading. Order types like the stop-loss order and many others can easily help save you from losing millions because without prior knowledge these types of orders you can easily run at a lose.