Introduction to Order Types
Orders are critical tools for any type of trader and should always be considered when executing against a trading strategy. Orders can be used to enter into a trade as well as help protect profits and limit downside risk. Understanding the differences between the order types available can help you determine which orders best suit your needs and are best suited to help you achieve your trading goals.
Market
The foreign exchange market is a global marketplace for exchanging national currencies. Because of the worldwide reach of trade, commerce, and finance, forex markets tend to be the largest and most liquid asset markets in the world.
Limit
A limit order (also referred to as a “take profit” order) is an order to buy or sell at a specified price or better. A sell limit order is filled at the specified price or higher; buy limit orders are executed at the specified price or lower.
Stop
A stop order triggers a market order when a predefined rate is reached. A buy stop order triggers a market order when the offer price is met; a sell stop order triggers a market order when the bid price is met. Both stop orders are executed at the best available price.
Trailing Stop
Trailing stop will automatically trail your position as the market moves in your favor. If the market moves against you by the predefined number of pips, then a market order is triggered and the stop order is executed at the next available rate depending on liquidity.