Forex Secret Tips No 38 – Grasp The Basic Order Types For Your Forex Trades

The takeaway Forex trading tip from this article is: get a good grasp of the basic Forex order types and apply them correctly to your Forex trading. They can help you understand the various complex orders and equip you with knowledge to create customized orders too.

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There are several ways to open and close your Forex trades, depending on how you plan to enter and exit the markets. The three basic Forex order types are: market order, stop order and limit order Each order type can apply to both trade opening and closing.

Remember that a Forex quote has a bid and ask price When you issue a buy order, you pay the ask price of the Forex quote; when you sell, you hit the bid price. The difference between bid and ask prices is called the spread — this is what your broker earns each time you trade.

Take an example where EURUSD is currently quoted at 1.3388/1.3390. If you open a long position (i.e. you buy EUR, sell USD), you would pay 1.3390 to get into the markets https://www.prodigitalweb.com/. Should you decide to close the position immediately, and assuming prices did not move, you can only sell back at 1.3388. The 2-pip spread in this trade is pocketed by your Forex broker as commission. Which means just to break even requires prices to tick up 2 pips, in your favour.

Now for the basic Forex order types, starting with the straightforward market order. This is followed by the easy limit order, and lastly, the more confusing stop order. The combination of these order types into complex Forex orders is also covered briefly.

** Market Order **

The market order allows you to trade at the current prevailing price. At the instant your order reaches the broker, you are filled based on the Forex quote then and there. This may not be the quote you saw on your trading terminal when you issued that market order, depending on how fast the markets were moving and how long it took for the Forex order to get routed.

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