The following section describes common orders (types of trades) available through your trading platform.
Market orders
A market order is a trade that gets executed instantly, at a price the broker has provided. This includes Buy orders and Sell orders.
For example, let’s say the bid price for the EUR/USD currency pair is currently at 1.2140, and the ask price is 1.2142. If you wanted to buy EUR/USD, it would be sold to you at the price of 1.2142. When you click “Buy,” the trading platform will instantly execute a Buy order at the current market price*.
*Please note: Due to slippage, the quoted price may change between the time you place the trade and when it is executed through the platform. For more, refer to our section on Slippage.
You can learn more about Buy and Sell at Rate in the video below.
Pending Orders
A pending order is a trade that is set to be executed at a later point, at a price you specify. Types of pending orders include limit orders, stop loss, and trailling stops.
Limit orders
A limit order is an order placed to either buy below the market, or sell above the market, at a certain price. You would place a “Buy Limit” order to buy at, or below, a specified price. You would place a “Sell Limit” order to sell at a specified price, or better. Once the market reaches the “limit price”, the order is triggered and your trading platform will automatically execute the trade at the limit price (or better).
For example, let’s say the EUR/USD currency pair is currently trading at 1.2050, and you want to go short if the price reaches 1.2070. You have two options:
- Continuously monitor the markets and wait for the price to reach 1.2070, at which point you manually click a sell market order, or
- Set a Sell limit order at 1.2070, then let your trading platform automatically execute the trade if the price reaches your set price
This type of order would be commonly used when you believe the price will reverse upon hitting a specified price.
Stop entry orders
A stop order “stops” an order from executing until the price reaches a specified stop level. You would place a “Buy Stop” order to buy at a price above the market price, and it is triggered when the market price touches or goes through the Buy Stop price. You would place a “Sell Stop” order to sell when a specified price is reached.
For example, let’s say the GBP/USD currency pair is currently trading at 1.5050 and is trending upward. You believe that the price will continue in this direction if it hits 1.5060, so you could do use of the following methods:
- Monitor the market, wait until the price reaches 1.5060 and manually click to buy at the market price, or
- Set a stop entry order at 1.5060 and let the trading platform automatically execute when the set price is reached.
Stop loss order
A stop loss order is an order to close out a trade position if the market price reaches a specified price, which may represent a profit or loss. The purpose of a stop loss order is to prevent additional losses if the price goes against you.
For example, let’s say you go long (buy) EUR/USD at 1.2230, anticipating that the market price will go up. But, to limit potential losses if the market goes in the opposite direction, you set a stop loss order at 1.2200.
If your prediction was wrong and the price of EUR/USD dropped to 1.2200 instead of moving up, your trading platform would automatically execute a sell order at 1.2200 (or the best available price) and close out your position for a 30-pip loss. While you have still incurred a loss, it may be limited when compared to the same trade that did not have a stop loss in place. A stop loss order remains in place until the position is liquidated, or you cancel it.
Trailing stop
A trailing stop is a stop loss order that is always attached to an open position, and which automatically moves once the profit becomes equal to or higher than a level you specify.
For example, let’s say you decide to go short on the USD/JPY at 90.80, with a trailing stop of 20 pips. This means your original stop loss was at 91.00. If the price goes down and hits 90.60, your trailing stop will move down to 90.80 (or breakeven).
It is important to remember that your stop will STAY at this new price level – it will not widen if the market goes higher against you. If USD/JPY hits 90.40, your stop would move to 90.60 (or lock in a 20-pip profit).