Last week we discussed some forex orders like Market orders, Entry orders, Stop orders, Limit orders, and OCO orders. There are few other orders that we plan to discuss now.
There is one type of subsidiary or condition-driven orders known as If Done Order. This order is placed in the market owing to the contingency situation on the execution of the associated. This depends largely on combination. Two steps of limit orders or stop loss orders are associated with it. When the first order is filled, the other order is executed as well. This means the second order becomes valid only when the first one is executed. Therefore, it is just the opposite case of OCO orders.
The next is Position order, which is directly related to individual positions. These are active till the time the positions are open, and it can be either a stop loss or a limit order.
We have discussed Stop Loss order already. With stop loss order open positions are automatically liquidated at a pre-defined specific price. It becomes a market order when sold at or below the stop price. It is used to protect a trader against potential downward slip in a security. This also minimizes the exposure to losses if the market moves against the trader’s position.
Stop Market orders are placed when currency price reaches or passes through a specific price for buying and selling. It is mostly used by traders having a long or short position and when he or she wishes to close the position while the market moving against them. This is also applied when the trader wishes to open a new position when the currency price attains a specific level. The stop price on a sell stop is always below the current bid and the stop price on buy stop is always above the current offer.
Forex brokers may use different names or terminology for these common order types, but the working procedure is same. As a trader you must know their basic functionality to exploit their powers fully. Your profit and loss greatly depends on the orders you place.