A frequently asked question among those who make online trading is the following one: how to trade forex?
In order to answer the question “how to trade forex”, you will need a good forex education course to learn the art of the forex before trading real money. Obviously there are many online forex training courses, but these are not necessarily all effective. We are going to illustrate here below in a simple way what types of orders may be activated by those who do forex trading.
There are three types of orders frequently used in Forex trading:
- The Market order, to do online trading on an operational quotation
- The Stop and Limit order, that gives instructions to buy or sell if the market reaches a certain level
Orders can be linked to each other by the relation If Done and OCO and are qualified by their duration as GTG orders (Good Till Cancelled) or valid up to the specified date and time.
This is used to make fx trading at the current price. You ask a quote, by telephone or via Internet and you get a bid or ask quotation, and if the quoted price is fine, by applying the same one, you will sell on the bid or buy on the ask.
You can enter a stop order when you want to:
- Buy above the level of the market
- Sell below the level of market
In forex trading, a stop order is often used to put a limit to the potential loss of an open position, in this case we are talking about a stop loss. This order, however, can also be used to open new positions, for example if you believe that after breaking a certain level, the price might accelerate in the same direction, in this case we are talking about stop entry.
You can enter a limit order when you want to:
- Sell above the level of the market
- Buy below the level of market
A limit order is often used to get a profit from an already existing fx trade but it can also be used to open a new position of fx trading.
A buy limit order will only run if the ask of the market maker reaches that level. It will be executed at the given price, nor pejorative or ameliorative.
A sale limit order will only run if the bid of the market maker reaches that level. It will be executed at the given price, nor pejorative or ameliorative.
IF DONE ORDER
An If Done order is an order that becomes effective only after the execution of the order on which it depends. In practice, the fx trade is activated only when the condition is realized on the market.
Two orders on the same change can be connected to each other by the OCO order (one cancels the other). With an OCO order, the execution of one of the two linked orders of forex trading leads to the automatic elimination of the other one.
Forex trading orders can be valid only up to a specific time on a specific day or until revoked. The effective orders until further notice are called GTC (good till canceled).
ORDERS VALID UP TO SPECIFIED DATE AND TIME
For each order of fx trading, there might be a deadline; for example, the trader may specify that a certain order will be “valid until 16.00 when the USA confidence indices will be released.”
CANCELLATION OF ORDERS
It is very important that the trader remember to cancel a GTC order if he wants that it is no longer valid.
Usually, the broker consider the existing orders as GTC orders unless it is otherwise stated.