All order types and execution modes in foreign exchange transactions
“Order” refers to how you will enter or exit a transaction. Below, we will discuss different order types. Once you place an order successfully, it means that you have entered the foreign exchange market.
There are some general order types, which are provided by almost all foreign exchange brokers. Of course, there are some order types that sound strange.
All order types and execution modes in foreign exchange transactions—Yuhui International
Market order (Market Order) is an order to immediately buy or sell a certain number of contracts at the current best price or market price in the market.
For example, the current purchase price of EUR / USD is 1.2140 and the current selling price is 1.2142. If you want to buy EUR / USD at the market price, the market will sell you the price 1.2142. You will click the mouse and click the buy button on your trading platform, the system will immediately execute the buy order at this price.
Limit Entry Order (Limit Entry Order), that is, a buy order is placed at a point below the market price, or a sell order is placed at a point above the market price. When the exchange rate reaches the set price target, the list will automatically trigger execution, otherwise, it will not be executed.
For example, the current exchange rate of EUR / USD is 1.2050. You plan to short when the exchange rate reaches 1.2070. At this time, you have two options: either sit in front of the computer and wait for the exchange rate to rise to 1.2070 to short at the market price, or set a limit order at 1.2070. Then, you stay away from the computer and wait for the system Automatically execute orders.
When you believe that the price turns after you touch the price you set, you can use limit orders.
Stop Loss Order
Set your own stop entry order (Stop Entry Order), that is, you set a buy order at a point above the market price, or a sell order at a point below the market price.
This strategy is used when the market has a breakthrough market. For example, if a trader believes that when the exchange rate reaches a certain price, it will confirm the establishment of the current trend and will continue this operating trend. In this case, This strategy can be used.
For example, the current price of GBP / USD is 1.5050, and it is in an upward trend. You believe that if the price touches 1.5060, it will continue to rise. At this time, you also have two options: first, sit by the computer, buy at the market price when the exchange rate reaches 1.5060, or choose to set your own stop loss order, when you feel that the price will continue to run toward the current price, you are in 1.5060 set a stop-loss buy order.
The purpose of setting Stop-Loss Order is that if the price fluctuates in the opposite direction to your judgment, you can avoid additional losses in time.
Please remember this type of order firmly. The stop loss order will remain in effect until your position is closed or you cancel the stop loss order.
For example, you plan to go long EUR / USD at 1.2230. To limit your maximum loss, you set a stop loss order at 1.2200. This means that if your direction is judged wrong and the EUR / USD falls below 1.2200, your trading platform will automatically execute a sell order for you at 1.2200 and automatically lock in the loss of 30 points.
If you do not plan to sit in front of the computer all day, worrying that you will lose all your funds, stop loss orders will be very useful. At the same time you open a position, you can set a stop order.
Trailing stop (Trailing Stop), that is, the set stop loss point continuously changes with the price fluctuations.
For example, you plan to short USD / JPY at 90.80 and set a moving stop at 20 points. This means that at the beginning, your stop loss is at 91.00. If the price drops to 90.50, then your stop loss will become 90.70.
As long as the price changes are consistent with the direction of your judgment, or even if it is contrary to your judgment, but does not reach 20 points, your list will always be valid. Once the price reaches the mobile stop loss level, the stop loss order is automatically triggered, then you will automatically close the position.
Valid order before cancellation (GTC)
GTC order (Good ‘Till Cancelled) means that the order will remain valid until you decide to cancel the order. Your broker cannot cancel this order at any time.
Good Day Order (GFD)
GFD orders (Good for the Day) are always valid until the end of the trading day. Because the foreign exchange market is a 24-hour uninterrupted trading market, this usually means that after the New York market is closed, the order will be automatically invalidated. However, we recommend that you confirm this with your broker.
Selective Order Order (OCO)
Selective order (One-Cancels-the-Other) bundles stop-loss orders and take-profit orders together to ensure that when one of these two orders is executed, the other will be automatically void.
Let us take the example of EUR / USD. If the exchange rate of EUR / USD is 1.2040, you want to buy at 1.2095 after the exchange rate breaks through the resistance level, and you want to go short when the price falls below 1.1985. In the case where you select the OCO order, if the exchange rate touches 1.2095, a buy order will be triggered, then the 1.1985 sell order will be automatically canceled.
OTO orders (One-Triggers-the-Other), that is, after the current order is triggered, it is possible to trigger the OTO order. When you plan to set profit targets and stop loss targets in advance, even before you trade, you can set up OTO orders.
For example, the current exchange rate of USD / CHF is 1.2000. You believe that once the exchange rate hits 1.2100 the trend will turn, but at most it will only fall to 1.1900. The problem is that you will be traveling for a week, and you won’t have access to the Internet for this week.
In order to catch the wave of market you judge, you can set a sell limit order at 1.2000, at the same time, a buy limit order at 1.1900 and a stop loss order at 1.2100. In the OTO order, if a sell order of 1.2000 is triggered, then both the limit buy order and the stop loss order may be executed.
The basic order types are usually required by most traders.
Unless you are an experienced trader (don’t worry, enough patience and time will make you a veteran), don’t design your trading system to allow the execution of a large number of unusual orders.