Order Types

When we bought we must execute a buy or sell order. Each broker it has its types of orders and it is possible that perhaps some order of which we will speak here you don´t find it in your broker and also is possible that your broker has more types of orders of which we explained here. The best thing than you can do is to consult with your broker for knowledge that types of orders it has. We are going to explain the types of orders that normally have almost all brokers.

Basic Order Types

There are types of orders that all brokers allows, that usually is used, but also exists other orders that so are not used.

Market Order: : It is an order to buy or to sell to the present price of the market of a certain currency. The market orders are instantaneous orders. If for example you wished to buy the USD/CAD in 1.1852, single you will have to do click in buy and to establish the amount of lots that you wish to buy and the order was executed right away.

Limit Order: This order is a conditional buy or sell order to a certain price. It has two forms this order, Buy Limit and Sell Limit.

Buy Limit: In this case the present price of the market is greater of the price than we will put of purchase. This order is used when we have the security of which the price will fall until a certain point, and later will raise.

Example:

The present price of the USD/CHF is 1,2473 and we suppose that it will fall to 1.2403. Then we will put an buy order (buy limit) with the price of 1,2403 with a taking of benefits to 1.2443. If the even loss to that limit will open the position if the order that we have opened raises 1,2443, we will have gained 40 pips.

Sell Limit: In this case the present price of the currency is inferior that the buy price. This order is used when we hoped that the price raises until a certain point and later it will fall.

In both cases the price was specified to which it is wanted to buy or sell as well as how long we want ot keep this operation active (GTC Or GFD).

Example:

The present price of the USD/CHF is of 1,2302 and thought that it will raise 1,2372 and thought that it will fall up to 1.2322. Then we will put a sell order (sell limit) with the price of 1,2372 with a taking of benefits to 1.2302. If the pair raises that it limits will open the position if the order that we have opened falls to 1,2322, we will have gained 50 pips.

Stop Order: This order is a conditional buy or sell order to a determined price. Like Limit Order has two variables, that are the price to which it is wanted to buy and the duration. And also it has two forms of Order, Buy Stop and Sell Stop.

Buy Stop: In this case the present price of the market is minor that the buy price we placed in the order. Buy Stop is used when we have certainty that when the price arrives at a certain point, the price will continue raising.

Example:

The present price of the USD/CHF is of 1,2350 and we thought that it will fall to 1,2312 for a raise to 1.2362. We will put an buy order (buy stop) with the price of 1,2312 with the taking of benefits to 1.2362. If the even loss to that limit will open the position if the order that we have opened raises 1,2362, we will have gained 50 pips.

Sell Stop: In this case the present price of the market is greater than the sell price we placed in the order. Sell Stop is used when we have the security of which when the price arrives at certain point, the price continued falling.

Example:

The present price of the USD/CHF is of 1,2412 and we thought that that currency will make a backward movement to return to fall. Then we will establish an sell order (sell stop) to 1,2382 for a taking of benefits to 1.2342. If the low price to 1,2382 then will open the position if the order that we have opened it falls to 1,2342 we will have gained 1.2342.

Order with Stop-Loss : They are those operations in which we will place a price of exit to prevent that there is greater lost, in case the price which we have place like objective, has not been reached. The order will stay open until that position is closed or so it has touched target, closing itself with benefits, or so that the order has arrived at the price established in the Stop-Loss.

Let suppose that we opened a buy position in the USD/CHF at the cost of the market of 1,2473, and establish the Stop-Loss in price 1.2443. But instead of raising the USD/CHF, the price falls to the Stop-Loss that we have established in 1.2443, then the position was closed automatically and will be lost 30 pips. This order is good for using it if we are not going to be in front of the computer.

Let see a charts of the orders Buy Limit, Sell Limit, Buy Stop and Sell Stop.

GTC – Good’Til Canceled: Order GTC will stay activates in the market until you decide to cancel it. Also you must consider that this order can be closed or by target which you have put or by the Stop-Loss. But never broker cancelled this order in no moment, so it remembers that you have an active order.

GFD – Good for the day: Order GFD will stay activates in the market until the session of that day finalizes. Ten in account that the session usually closes to the 5 P.M. EST that is the hour to which it closes the American market, but is many brokers that close the session to another hour so we advised to you to consult to that hour closes the session broker whereupon you work.

OCO – Order Cancels Order: Order OCO is an order that are a mixture of two orders Limit and /or Stop-Loss. Those two you order with prices and you order variables are placed by above and under the present price. When one of those two orders is executed another one is closed automatically.

Let us see an example of an order OCO, in which we decided to operate with the USD/CAD, being its present price of 1,1852, and your you want to buy to 1,1907 since the USD/CAD can there break down the resistance, or to sell if the price falls to 1.1797. In case one of the two is opened you order, the other will be closed automatically.

As we already said to the beginning the best thing is than you consult to your broker to see that types of you order. In case that you hold a position opened by more of a day, broker it applied the Swap that already we have explained to you.