Order types: Buy and Sell

There are 2 order types in the forex market:

• Instant Execution ( on market price )
• Pending Orders - limit and stop orders

Market Order

A market order is an order to buy or sell at the current market price.The execution of the order is instantaneous.

Limit Orders

A limit order is an order placed to buy or sell at a certain price. The order essentially contains two variables, price and duration. The trader specifies the price at which he wishes to buy/sell a certain currency pair and also specifies the duration that the order should remain active.

Stop orders

A stop order is also an order placed to buy or sell at a certain price. The order contains the same two variables, price and duration. The main difference between a limit order and a stop order is that stop orders are usually used to limit loss potential on a transaction whilst limit orders are used to enter the market, add to a pre-existing position and profit taking.

Both, Stop Orders and Limit Orders, have the following options:

GTC (Good till cancelled): A GTC order remains active in the market until the trader decides to cancel it. The dealer will not cancel the order at any time therefore it is the customer's responsibility to remember that he possesses the order.

GFD (Good for the day): A GFD order remains active in the market until the end of the trading day. Since foreign exchange is an ongoing market the end of day must be a set hour.




Best Regards,  
^^_Lord_Ice_^^