Types of Forex orders

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Types of orders used in the Forex market can be divided into two big groups: pending orders and market orders. Order is an order given to a broker that instructs it to buy or sell an asset at a pre-defined price and at a certain time.

The market order is an order to buy or sell an asset at the current price and time. The result of execution of the given order is a trade made at the best (next) possible market price. Assets are bought at ASK price and sold at BID price.

The pending order is an order to buy or sell an asset at a pre-defined price in the future. Setting the pending order stipulates for opening a position not at the present time, but exactly upon hitting a certain price level. The pending orders are classified into two groups: Buy stop / Sell stop and Buy limit / Sell limit.

Forex orders

Buy limit is an order to buy at a better (lower) price than that available at the moment. The idea behind the order is that a trader hopes that an asset price will go lower to a certain level (pullback) and then go higher.

Sell limit is an order to buy at a better (higher) price than that available at the moment. The idea behind the order is that a trader hopes that an asset price will go higher to a certain level and then go lower.

Buy stop is an order to buy an asset at a higher price than that available at the moment. The Buy stop order is set at the price level, which is higher than the current asset price, and is triggered, when the level is broken above, in anticipation of the further price rise.

Sell stop is an order to sell an asset at a lower price than that available at the moment. The Sell stop order is set at the price level, which is lower than the current asset price, and is triggered, when the level is broken lower, in anticipation of the further price fall.

There are such types of Forex orders that allow limiting potential loss or taking the profit earned by a trader: Stop Loss order and Take Profit order.

Stop Loss order is set at a higher (for Sell trades) or lower (for Buy trades) price level than order open price to limit a potential loss. When a price hits the Stop Loss level, the position will be automatically closed at the loss initially defined in the Stop Loss order.

Take Profit order is set at a higher (for Buy trades) or lower (for Sell trades) price level than order open price to take a potential profit. When a price hits the Take Profit level, the position will be automatically closed at the profit initially defined in the Take Profit order.

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