Trading Orders

Forex and CFD Trading Orders

There are various types of orders which a trader can use to trade Forex and CFDs. Below we outline the different order types: Market Order, Stop-Loss / Limit Orders, Entry Orders, Trailing Stop-Loss Orders and One-Cancels-the-Other Orders.


Market Order
A market order is an order to buy or sell at the current ask or bid price quoted on the market. The buy order may be to initiate a new position or liquidate a previous sell position. The sell order may be to initiate a new position or liquidate a previous buy position.

Here is an example of a market order. The current market price – in this case, for buying US Dollars (Ask price) - is 1.0555 and for selling US Dollars (Bid price) is 1.0551.

 Stop-Loss / Limit Orders

Stop-Loss and Limit orders are protective orders that close an open position or future position under certain conditions, namely price.

Stop-Loss Orders are used to limit trader's losses if the market moves against their position. The trader sets the maximum amount (in terms of pips) that he is willing to lose on a certain trade. When that specified price is reached, the trade is executed.

Conversely, Limit Orders are used to lock in the trader's profit if the market moves favorably. The trader sets in advance the price at which he wants to close his position.

In the example below, a trade was opened at the market price of 1.0561(buying order). According to the stop-loss order, the position will be closed if and when the price falls to 1.0553. According to the take-profit order, the position will be closed if and when the price hits 1.0565.

 Entry Orders

These types of orders open a new position only if the market reaches a price specified by the trader.

Entry orders are divided into two varieties: Entry Limit Orders and Entry Stop Orders.


Entry Limit Orders – Entry limit orders are orders that are placed by traders to enter the market at a more favorable price than the current price. When Buying a currency pair or a CFD, a Entry Limit order will be placed below the current market price. When Selling, a limit entry order will be placed above the current market price.
When placing Entry Limit Orders, the trader expects that the market price will bounce back after reaching the level at which the entry limit order was placed.

For example:

The USD/CAD trades at 1.0547 / 1.0551. Here, you expect the pair to trend higher, but prefer going long at a better price – you expect the price to go down to 1.0525 before it continues going up. You then place an entry limit buy order of 1 lot (5,000 USD/CAD) at 1.0525. When the rate reaches 1.0525, the limit order will be executed and 1 lot of USD/CAD will be bought at 1.0525.

Entry Stop Orders – Entry stop orders are orders that are being placed by traders to enter the market at a less favorable price than the current price. A BUY Entry Stop order will be placed above the current market price. When A SELL Entry Stop order will be placed below the current market price.
When placing Entry Stop Orders, the trader expects that once the market's momentum breaks through the specified price, the trend's movement is confirmed and will continue in that direction.

For example:

 One-Cancels-the-Other Orders (OCO)

OCO orders are combined orders with both a stop price and a limit price. When one of the orders is executed, the other is automatically cancelled. OCO orders can be applied to open positions, or they can be used to open a new position.

Say for example a trader believes that the USD/CAD, currently traded at 1.0548/1.0552, will continue trending higher; you believe that should the pair break above 1.0560, it will rise to at least 50 pips. Nevertheless, you expect that prior to this major incline, the pair will retrace to 1.0544. You can place an entry limit at 1.0544, but in case the pair does not hit 1.0544 before climbing higher, you would miss the trade. You then place an OCO order to buy the USD/CAD if it reaches 1.0544 or 1.0560. Of the two, the first bid price to exist in the market will trigger the order:

 Stop and limit orders entered on an existing position are also types of OCO orders. When either the stop or the limit is executed, the other is automatically canceled.