While the majority of the retail Forex positions are opened with the simple market orders (i.e. at the current price), there are also other types of trading orders in use by the FX market participants. Here are the most popular of them:
Stop/limit pending orders are the common trading orders. Stop orders are used to buy or sell when we want to enter the currency market when the price has already come some way in the same direction as the expected trade. Limit orders are used to buy or sell when we want to enter the market when the rate has already come some way in the direction opposite to our trade. Both stop and limit orders are very useful if you don’t want to sit in front of your Forex terminal all day long, waiting for the price to hit some important entry level. I don’t use pending orders often.
Trailing stop is an automated way to let your profits run, while maintaining a safe “airbag” in case the trend reverses. It’s a
Expiring orders — like the OCO, they aren’t a separate type of orders, but a simple addition to the pending orders. Making an order to expire if it doesn’t trigger during some period of time can help preventing the old stop or limit orders from triggering when the market conditions have already changed. If you use pending orders, you probably also want to use expiration on them if you don’t want to cancel them manually later.
So which of those trading order types do you use? I intentionally don’t list market orders here, assuming that 99% of Forex traders have to use them. You can choose several answers from the list.
If you want to share your thoughts or ask a question about different types of orders in Forex trading, feel free to reply using the form below.