Before you enter into the forex market you need to know how to place order with forex brokers. Most important thing you need to know before you place an order with a broker is “How to place them appropriately”/ how you intend to enter and exit the market; orders should be placed staying on that determining factor. Improper order placement can skew your entry and exit points.
Some of the orders you can choose are:
- Market Order
You may use the market order to enter a new position (buy/sell) or to exit an existing position (buy/sell). All orders are processed within present priority guidelines. Whenever a market order is placed, there is always the threat of market fluctuations occurring between the time the broker receives the order and the time the trade is executed. This is especially a concern for larger orders, which take longer to fill and, if large enough, can actually move the market on their own. Sometimes the trading of individual stocks may be halted or suspended.
- Stop Order
A buy-stop order is an instruction to buy a currency pair at the market price once the market reaches your specified price a higher, which is higher than the current market price. A sell-stop order is an instruction to sell the currency pair at the market price once the market reaches your specified price or lower, which is lower than the current market price.
For instance USD/CHF is rallying toward a resistance level and based on your analysis you thing that if it breaks above that resistance level, it will continue to advance higher. To trade this opinion, you can place a stop-buy order a few pips above the resistance level so that you can trade the potential upside breakout. If the price after reaches or surpasses your specified price, this will open your long position.
- Limit Orders
Unlike market orders, it is common to allow limit orders to be placed outside of market hours. In these cases, the limit orders are more complicated to execute than market orders and subsequently can result in higher brokerage fees. For low volume stocks that are not listed on major exchanges, it may be difficult to find the actual price, making limit orders an attractive option
- Limit orders are commonly used to enter a market when you fade breakouts.
- Limit orders are used to set your profit objective
- OCO orders
For instance let’s say EUR/USD pair is trading at 1.6050/1.6052 and you felt that either a fall below 1.6000 would open the pair up for further losses, or a break above 1.6100 could indicate more gains. Therefore, you place an OCO order to BUY stop order at 1.6110 and a sell stop order at 1.5990. The EUR/USD forex pair price falls below the 1.6000 level and triggers the sell stop order at 1.5990. This means that the stop order is filled and a new sell position created whilst the linked buy stop order at 1.6110 is automatically canceled.