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Order TypesORDERTYPESMarket OrderA market order is an order to buy or sell at the current market price. Customers using the online trading platform click on the buy or sell button after having specified their deal size. The execution of the order is instantaneous; this means that the price seen at the exact time of the click will be given to the customer. This also applies for limit and stop orders. The simplest way to place a market order is to use the WYCIWYG box. The real time bid/ask prices appear in the trading box for each currency-pair. A client has just to click on the current bid or ask offer for executing the trade. Limit Orders A limit order is an order placed to buy or sell at a certain price. The order essentially contains two variables, price and duration. The trader specifies the price at which he wishes to buy/sell a certain currency pair and also specifies the duration that the order should remain active. GTC (Good till cancelled): A GTC order remains active in the market until the trader decides to cancel it. The dealer will not cancel the order at any time therefore it is the customer's responsibility to remember that he possesses the order. GFD (Good for the day): A GFD order remains active in the market until the end of the trading day. Since foreign exchange is an ongoing market the end of day must be a set hour. For GFFOREX the end of the trading day occurs at exactly 12:00 GMT or 01:00 CET. Stop Orders A stop order is also an order placed to buy or sell at a certain price. The order contains the same two variables, price and duration. The main difference between a limit order and a stop order is that stop orders are usually used to limit loss potential on a transaction whilst limit orders are used to enter the market, add to a pre-existing position and profit taking. The same variations are used to specify duration as in limit orders (GTC and GFD). Another usage of a stop order is when a trader is expecting a price breakout to occur and wishes to grasp the opportunity to 'ride' the breakout. In this case a trade will place an order to buy or sell 'on stop'. OCO Order An OCO (order cancels other) order is a mixture of 2 limit and/or stop orders. 2 orders with price and duration variables are placed above and below the current price. When one of the orders is executed the other order is cancelled. Trailing stop order Placing a trailing stop order is similar to a normal stop order with the difference that additional order parameters is prompted to specify Trailing Points, which is the number of pips from the current rate at which you want the stop loss order to be executed. The system accepts Trailing Points between 20 and 2000. The advantage of a trailing stop is that the order automatically "trails" the rate if the position moves in your favor, offering the potential for greater gains while still guarding against price declines. Technically speaking, the only difference with a normal stop order, is that the stop price changes as the rates moves in your favor. IF DONE order Two-legged order whereby the second single order is placed only upon execution of the first single order. Example: The trader believes that the EURUSD is going down but will reach a resistance at 1.3060. At that point, the trader thinks that the market will rebound and that's why he planned to place a sell order at 1.3100. IF DONE / OCO order An entry order, where limit and stop/loss are placed after the order in the IF section (entry price) has been successfully executed. These kind of orders allow the trader to execute its strategy without being all the time behind his computer. |
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