What are the different types of orders?
Market Order:
Is a manual order that allows you to Buy or Sell at current market price.
If you want to Buy you can just click on the Ask button and if you want to Sell you can click on the Bid button and your trade will be placed.
-Stop Loss Order:
Is in essence also a market order: it is an order used to close your trade. It will allow you to limit your losses. You can choose to set your Stop Loss at a pre-defined level. Knowing how much risk you are willing to take per trade, will help you calculate how big your Stop Loss can be.
For example, If you went long (bought) the EUR/USD at 1.2486 and you could only risk 20 pips, then you could put your Stop Loss at 1.2466. (1.2486-20 pips = 1.2466).
On the other hand, let's say that you Sold the EUR/USD at 1.2486, having a maximum risk of 20 pips, will allow you to put your Stop Loss at 1.2506 (1.2486+20 pips = 1.2506).
In other word, a Stop Loss Order is a tool that will help you manage your risk and Trading Capital.
Pending Orders:
Pending orders, also referred as PO are automatic orders that will be executed when price reaches a pre-defined price. There are 2 types of pending orders:
1) Limit Order:
A Limit Order is an automatic type of Order that allows you to buy or sell at a pre-defined price. For example, if price is at 1.2450 and you would like to sell the EUR/USD at 1.2500, you can place a Sell Limit Order at your wanted price and your trade will automatically be triggered if Price reaches 1.2500. On the other hand, if price is at 1.2550 and you would like to Buy the EURUSD at 1.2500, you can place a Buy Limit Order at your wanted price.
However, you should take the Spread in consideration when placing a PO. Let's take the previous example:
Let's say that you expect price to reverse at 1.2500, in order to have your long trade triggered (buy order), you would have to subtract your spread from 1.2500. So if your broker charges you a 2 Pip Spread on the EURUSD, you should then put your Pending Order at 1.2498.
2) Stop Entry Order:
A Stop Entry Order is also an automatic type of order. You can use a Stop Entry Order to Buy above the current market price or Sell bellow the current market price at a pre-defined level.
This is a type of Order that can be used for a " Confirmation Trade". For example, price has just started to trade up, it's currently at 1.2480 and you think that it will still go up if we pass 1.2485. In this case you could place a Buy Stop Order at 1.2486 and vice versa for a Sell Stop Order. This is useful if you think that for example 1.30 is a strong resistance. If price closes above this resistance, it can go higher. Then you can place your Buy Stop order above 1.30.
*Good to know:
Limit and Stop Entry Orders can be cancelled and or modified by the trader at any time, as long as the trade has not been triggered yet.
Advanced type of orders:
-OCO Orders
An OCO (One Cancels the Other) order consist of 1 order with 2 different entries. An OCO order is an automatic order that can be set above and bellow price. In other words you could set a buy and sell order above and bellow the actual price, once either the buy or sell order gets triggered, the other entry will be automatically cancelled. Not every broker offer this type of order, so check with your broker if you would like to use it.
click on the link to see an example on a chart
Article Source: http://EzineArticles.com/?expert=Mel_Al
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