Forex Recipe

Forex market has some basic order types like Market Orders, Stop Losses, Limit Orders, etc. Depending on a particular broker they may vary slightly retaining the basics. Some automated orders are generated at pre-determined exchange rates that are placed to control the downside or to consolidate the upside. It is extremely important for the investors to know about different Forex orders to protect themselves and to earn more profits from the forex market.

Market Order is the one with which you can buy or sell a currency pair at the prevailing market price the moment the order is processed. Customers using some automated trading platform can simply click on the buy or sell option after specifying the size of the deal. The order gets executed instantly. You can place market order by phone as well, which may take few seconds more.

The next type is the Entry order, which you use while buying or selling a currency pair at a certain price. All you have to do is to place an entry order for either the low price the high price of a time period.

Stop Orders can be defined as a market order for a currency pair when it attains a specific price level. The order is placed below the current market price for the currency. Stop orders are placed to limit the loss for a particular transaction, whereas limit orders are placed to enter the market.

So, Limit Orders can be defined as a market order when the currency pair reaches a specific price level. Limit orders can be of two types, buy limit and sell limit. Buy limit order is executed to limit price or lower and a sell limit order is for limiting price or higher. A limit order is always placed above the current market value of the currency. Limit orders will have two variables, price and duration. The trader may define the price for buying and selling a certain currency pair and may also specify the time for which the order will remain valid.

OCO Order is placed for taking advantage of market price movement comprising stop and limit price. Once the first level is achieved, half of the order is executed and the balance order is canceled (in both the cases, either stop or limit). This ensures that your position is locked in case of the market moved toward either the stop rate or the limit rate. This will close the trade with canceling the other entry order.

We will discuss some more orders in future!!

This entry was posted on Friday, August 15th, 2008 at 6:40 am and is filed under Forex for Beginners. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.