Using orders in forex trading

Placing orders in the forex market can be done in various ways. Traders manage their positions by placing orders. While the types of orders offered in different brokers can be different, the basis of how to place orders in forex is the same in all brokers. Having enough information about how to place orders in forex can make traders set their entry and exit points in the market well. Orders in the foreign exchange market provide traders with the opportunity to conduct transactions with peace of mind.

Market orders are among the most basic orders used by Forex traders. As it is clear from the name of this type of orders, these orders are executed in the market at the moment. This means that using these orders you can make a trade at the current market price. In general, scalpers and day traders use market orders to quickly enter and exit the market.

For example, imagine that the current price of buying and selling of a certain currency pair is 11392.9 and 11392.3, respectively. If a buy order is used, the specified volume is bought at the current bid price, which is equal to 11392.9. Similarly, if a sell order is used, a sell transaction with the specified volume will be entered into the trader's account.

After market orders, entry orders are among the most used orders in Forex. The advantage of such orders is that they can be executed at a price other than the current market price. These orders can be specified at a price different from the current market price, and are executed when the market price reaches the specified price. Trading using entry orders has many advantages. One of the possibilities that entry orders provide for traders is that the trader does not need to constantly monitor the market to make a trade at a certain price.

Traders can use entry orders for breakout trading strategies or other strategies to increase the accuracy of their trades.

There are two types of limit orders in forex:

The first type of limit order that is introduced is to improve the starting point of the trade. For example, this order is used if the EUR/USD exchange rate is at 1.1294 and the trader anticipates that the price will drop to 1.1200 before starting an uptrend. In this case, the trader uses buy limit order and sets the purchase price to 1.1200.

Now suppose the EUR/USD exchange rate is at 1.12939, and this time the trader predicts that the market will rise to 1.1300 before any downward movement. In this case, this trader uses the sell limit order to sell this currency pair at the level of 1.1300. If limit orders are used, the registered order will be executed at the specified price, or a better price.

Limit orders can also be used to exit trades. Limit orders can be used as take profit. Suppose you bought the EUR/USD currency pair at the exchange rate of 1.1300 and want to exit the market after taking 100 pips of profit. In this case, you can set sell limit order at the price of 1.1400. In this case, when the market reaches 1.1400 or higher, your trade will be closed with 100 pips of profit.

On the other hand, if you sold the EUR/USD currency pair at the exchange rate of 1.1300 and still want to exit the trade with 100 pips of profit, you can use a buy limit order. In this case, you should place a buy-limit order at the exchange rate of 1.1200, so that you can exit the market with 100 pips of profit if the price of this currency pair falls.

Stop orders are also an important part of how to place orders in forex. In general, there are two types of stop orders in Forex:

The first order we introduce is the one you can use to enter the market. These orders can be used to trade at breakout levels. If a trader predicts that the EUR/USD currency pair will start an uptrend after breaking the 1.1500 level, he can set a buy stop order at the exchange rate of 1.1501. In this case, when the market reaches the exchange rate of 1.1501, the buy stop order will be activated, and your trade will be executed at the first possible price.

On the other hand, if your prediction is that the EUR/USD currency pair will continue its downward trend after reaching the exchange rate of 1.1200, you can set a sell stop order at 1.1199. In this case, as soon as the market reaches the price of 1.1199, your order will be activated and the desired transaction will be executed at the best possible price.

You can also use stop orders to protect your trades. These orders can act as a stop loss. Let's say you bought EUR/USD at 1.1500, and you want to limit your loss to 50 pips. In this case, you can set the sell stop order 50 pips lower than the entry price. Then, as soon as the market reaches this exchange rate, your trade will be closed and the loss will be limited to 50 pips.

On the other hand, if you sold the EUR/USD currency pair at the exchange rate of 1.1400 and still wanted to limit the possible loss of this trade to 50 pips, you could use the buy stop order. For this, you need to set buy stop order 50 pips above your entry price. In this case, when the market price reaches the specified price, the buy order will be activated, ending your sell trade.

Depending on the forex broker you choose, placing an order in forex can be a simple task. Follow these steps when using Forex market orders:

However, you should pay attention to the fact that the process of placing orders may be different in different trading platforms. Therefore, keep in mind to read the help section of the platform you are using before placing an order in Forex. By doing this, you can minimize the possibility of errors.

Written by: Mohsen Mohseni (Aron Groups).