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Forex trading deals with volatile and fast moving markets, and can be a difficult and problematic business. This type of trading uses its own language, which you will need to learn in order to keep up with trading. You will also need to familiarise yourself with Forex orders, which are essential tools to help you manage your day to day trading.
There are many types of orders, but the main three are market, limit and stop-loss orders.
Market Orders These are the basic orders, which are simply requests to your broker advising to sell or buy a specified currency at the current market price, in specified units.
Limit Orders Forex markets are in constant movement, and so limit orders can be set up so that you do not constantly have to scan the market waiting for certain favourably conditions. When you set up a limit order, it will send a request to buy or sell your position for you when the market attains specific values.
Stop-loss Orders This type of order is a back up request, that can limit the damages when the market moves significantly against your position. Once you have issued a market order to buy, you can set up a stop-loss order afterwards to sell that currency, if the market suddenly drops in value. You can specify the exact value at which you want to sell, so any losses are kept to absolute minimums.
There is also a combined order you can set up, called an Order Cancels Other (OCO) which allows you to place more than one type of order at the same time. By combing limit and market orders you can request that your broker buys at a certain lower value, and then sells immediately at a specified higher value. When one order requirement is met, the other is cancelled. This allows you even more control over your trade, to ensure you maximise profits on any sudden market increases.
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