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Currency Trading Order Definitions

By: James Theiss

When trading currencies online, there are several basic order types that you need to know. While there are a variety of orders that may be placed, remember to keep it simple, especially you beginning forex traders.

Market Order: Orders to get in or out of a position at the current market price. Execution is typically guaranteed, but price is not. A market order ensures that you will get into or out of the market.

Limit Order: Orders that specify that a trade must be executed at a specific price in the future. Execution is typically not guaranteed, but rather a "best efforts". They can be used to enter or exit a position.

Take Profit Order: A limit order that currency traders can use in an attempt to capture accrued profits and exit a position.

Stop Order: A stop order is used most often to protect against accruing additional losses, although execution and price is not always guaranteed. The most common use of a stop order is to set an exit point for a losing trade to try to limit risk. The term "stop" refers to stopping a loss.

Trailing Stop Order: A trailing stop order allows you to configure your stop order to continue to follow the price movement in real-time by specifying the distance in pips you would like your stop to move, depending on the market direction. As opposed to a hard stop like above.

Order Cancels Order (OCO): Also known as One Cancels Other. After entering the market, a limit order to protect profits, and a stop-loss order to limit losses can be placed. When either the limit or the stop order is executed, it will cancel the other order automatically.

Day Order: A day order remains in effect until the end of the trading day. Because the forex market is a 24 hour ongoing market, the end of the day is either a set hour or until the opening of the Asian market.

Good till Canceled Order (GTC): A good till canceled order remains active until the trader decides to cancel it, or it is triggered by the parameters set by the forex trader. It is the traders responsibility, not the dealers, to remember there is an open order.

When trading currencies in the forex market, stay away from complex order methodologies because of the increased possibility for mistakes and errors. It's just too easy to push the wrong button in a complex sequence during the fast moving trading hours.

The forex market is changing rapidly. Even as recently as two years ago it was relatively rare to find a dealer who offered trailing stop orders. Now it seems most, if not all do. So keep abreast of new technology by reading articles and forum posts. Good luck in your currency trading!

Article Source: http://www.tradeforex2000.info/forexarticledirectory

James is a successful online currency trader and also runs the popular website www.todayscurrencytrading.com

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A WORD FOR NEW TRADERS
Traders that try to pick the tops and bottoms of the market throughout the day end up with mostly misery because inexperienced fellows in Forex departments even in first division clubs try to pick the tops and bottoms believing that is where the real big money is. And ego demonstration and bonus consideration comes into play too for smart college graduates. The first thing I do when facing new recruits is, do my best to destroy their ego and fear in the market first. Once their ego and fear are reasonably cured, they become dutiful followers of the market like Pavolv?s hounds and they can survive. And once they can survive, they can be taught on how to put temporary tops and bottoms to the market at much higher level of speculation school. Then, that may take at least a decade of training too.
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