Orders are just one of two ways to execute trades in the forex market. Every currency trader should use both live trades and orders as part of their astute trading strategy. Live trades are ideal when a trader can be fully engaged at the computer or over the phone with the broker.
However, every trader must sleep sometime and may even have another job in addition to currency trading. Therefore, orders must be utilized to take advantage of market movements even when the trader cannot be fully present.
Types of Orders in the Forex Market
Orders are efficient ways to execute trades. Other advantages include helping the trader benefit from short-term price changes, protect profits and minimize loss, and preserve trading capital.
Take-Profit Orders
This type of order enables traders to lock in gains when they have an open position in the market. It is also possible to close only a portion of the open position through a “partial take-profit order.”
Limit Orders
A take-profit order is a form of limit order. The main difference is a limit order starts trades at more favorable levels than the current market price with the intentions of buying low and selling high.
Stop-Loss Orders
This type of order puts a halt on an open position that is losing money by closing out of that position. Utilizing these orders must be an integral part of a trader’s repertoire.
Trailing Stop-Loss Orders
These orders behave like a stop-loss order where the trader sets a fixed number of pips from his entry rate. The trailing stop-loss order then adjusts the order rate as the market price moves.
One-Cancels-The-Other-Orders (OCO)
This order is a combination of a stop-loss order and a take-profit order. It serves as security for any open position. The trader’s position remains open until one of the order levels is met by the market and closes out the position.
Contingent Orders
This type of order combines a variety of orders with the result of a complete currency trade strategy. The trader intends to cover all possible market movements with this thorough trading plan so that he can leave his computer and know his position is as secure as he can possibly make it.