Understanding The Forex Orders For Instant Forex Profits

In this article we will look at a number of the different forex trading orders that are used in the market place. It is important that the beginner forex trader has a grasp of these fundamentals before he begins his trading journey:

Limit Order – In this case, the trader specifies a price at which he may wish to buy or sell the currency. Suppose a trader has bought GBP against the USD at 1.9710, then he can place a sell order at 1.9725, when the exchange will execute the order and he will profit from it. The order will get cancelled if the target price is not achieved during the day.

Stop loss order – Due to the volatility, stop losses are essential. They determine the maximum loss a trader is willing to suffer. Suppose in the above instance, the risk-taking ability of the trader is low, then he may place a stop loss at 1.9705, at which level the exchange will book losses for him, and he won’t be affected by any fall below 1.9705.

Entry order – Such an order is filled only when certain conditions are met in the market, which the order specifies. The entry order can be a limit entry order or even a stop entry order.

Stop entry order – Such an order is generally used when the trader has sufficient grounds to believe that the currency is trading in a fixed range and believes that it is on the verge of a breakout from that range. He might want to buy at a price higher than the market price or sell at a lower price than the market price. In the same example, the trader may go ahead and buy at 1.9720 or sell at 1.9690, where he believes that once these levels are attained, the currency will only go up or fall further, as the case may be. A trader exercises the stop entry order only when a trader has reasonable grounds to believe that there will be sharp movements in the currency rates in the Forex market.

Limit entry order – an example, let’s assume that the current market price for GBP/USD is 1.9705-10. This implies that the trader can transact at these levels. Here, a trader can put a limit entry order to sell his holdings at a price more than the market price, say, 1.9715. His order would be executed only if that price is attained. In the similar manner, he can place an order for buying at a level of, say 1.9700, and his ‘buy’ order would remain pending till the price falls to that level.

You now have a better idea of the different trader orders in the Forex marketplace. Take action on this knowledge as you begin you Forex career

You can learn more about other aspects of Forex Trading via the instant fx profits site.

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