What Are the Types of Forex Orders?

After you have made the wise decision to try your hand at Forex trading, you will set about downloading your Forex software from the broker of your choosing. When you have done this and opened up your trading software you will see that there are a couple of ways to place an order buying and selling a currency pair.

The two types of Forex orders are explained as follows.

1/ First of all we have a Market Order. This is an order where you accept a market price as soon as the deal is processed. Basically speaking, when you put your order through you are saying " I will buy or sell this currency at the given price at the given time that the order is completed".

2/ The next Forex order type is an Entry Order. This is where you place an order to sell or buy a currency when it reaches a pre determined level. In theory this price can be set at anything, but this obviously has to be realistic. With the Entry Order you are saying " I want this deal done at this price level, but if it does not reach this level I don't want the order to go through".

A follow on to the Entry Order is to set a stop or limit order if you wish so to give yourself a little more of a safety net. These are ways to close a trade without the manual mouse clicking, so you can stop a trade automatically at a limit you can set in advance.

The reason for a Stop Order is to limit your losses. You are setting so that you can bale out of a deal when a certain level is reached. Needless to say this is very much recommended. On the other hand a Limit Order is more used to redeem profits.

The rule of thumb is that a Stop Order is placed below the current currency value so to help stave off too much damage, and a Limit Order is placed above the current currency value when you in a "going long" trade.

I hope you find this article useful in explaining Forex order types and you can check out the link below for more great resources for currency trading.

Dazza has a lot of experience in currency trading so if you would like some extra advice and great resources to get started in Forex Trading check out the link provided. Forex Order Types!

Article Source: http://EzineArticles.com/?expert=Dazza_Walker