Types of Orders In The Forex Market

There is a need for some form of automation in the Forex market. This is because the forex market is 24 hours in 5 days. Therefore if an open position is not managed for several days, its monetary value can change drastically. It is not possible to actively manage a 24×5 position manually unless a large multinational company can hire people to work around the clock.

Therefore in such a scenario, forex orders are very useful. It is a tool that investors and traders in the Forex market use to passively manage their open positions. These tools allow investors to ensure that the value of their trades stays within certain limits even if the market moves 24×5!

Market Order

Market Orders are the most common type of order used in the Forex market. Simply put, it’s just an order to buy something at the current market price. Therefore, if you have ever bought something online, the “Buy Now” button is a function just like market orders do in the Forex market.

In other words, market orders are executed in real-time when they are placed. This order automatically searches for the best price available in the market and places your order at that price. Since prices in the Forex market change so quickly, it is possible that market orders may be executed at a slightly different price than you would like! This is known as slippage in market terminology. Slippage sometimes benefits investors, while other times it may harm investors.

Pending Order

A pending order is an instruction to execute a buy or sell trade only if certain conditions are met. You can think of it as a conditional market order. Therefore, pending orders are not executed and are not considered part of the margin calculation until they are executed.

Pending orders eliminate the need to constantly monitor the market to place trades. Instead, it allows traders to set up automated orders that will execute trades in an instant whenever specified conditions are met. Orders such as pending orders reduce the need for manual intervention in trading.

Booking Order Profits

Profit Booking Order is usually an order to close an open position. This command specifies the conditions that must be met before the square takes place. For example, an order to execute a trade if the profit reaches a certain level. These orders allow traders to book profits in the market, where prices change rapidly and manual placing of orders may take a lot of time.

Stop Loss Order

A stop-loss order is the opposite of a profit booking order. The order specifies a threshold that investors are willing to bear. If the price is outside this threshold, investors close their positions to minimize their losses. These orders act quickly and prevent greater losses due to manual intervention.

Trailing Stop Order

Trailing stop orders are similar to stop-loss orders. This means that this order also closes open positions when the price touches a certain level. Let’s say you create a trailing stop order 10% below the market price. The next day the value of your holdings increases by 15%. In this case, the floor price will be 10% below the new current market price. Well, those are some examples of types of orders in the forex market.