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Basic Forex Order Types
Market Orders
Buy or Sell at the Current Market price.
Probably the most common order type of
all - A Market order is used to enter or exit the market immediately – This order is used to get into or out of a position as quickly as
possible at the Current Market price.
Limit Orders
Buy at or below my “Limit” price if the Current
Market price falls to that level or Sell at or above my “Limit” price if the
Current Market price rises to that level.
A Buy Limit Order is used to Buy at a
price BELOW the Current Market price – A Sell Limit
Order is used to Sell at a price ABOVE the Current Market price. Limit orders
can be used after strong price action, for example, Price has just broken out
and made a new high, a Buy Limit Order can be used to Buy at a price below the
Current Market price on a pull back to a Moving average or Fibonacci level – Vice versa for a Sell Limit Order.
Stop Orders
Buy at my “Stop” price if the Current Market price
rises to that level or Sell at my “Stop” price if the Current Market price
falls to that level.
A Buy Stop Order is used to Buy at a
price ABOVE the Current Market price – A Sell Stop
Order is used to Sell at a price BELOW the Current Market price. Stop orders
can be used to trade break-outs, for example, Price has been ranging between
1.5000 and 1.5200 and the Current Market price is 1.5100 – A Buy Stop Order can be placed at 1.5210 to catch the Upside
break-out and a Sell Stop Order can be placed At 1.4990 to catch the Downside
break-out.
Stop Loss
“Liquidate my position”
If in a Buy trade – Close (Sell) my Open Position At the “Stop
loss” price if the Current Market price falls
to that level – If in a Sell trade – Close (Buy) my Open Position at the “Stop
loss” price if the Current Market Price rises
to that level.
Probably the most important Order type of
all – Always linked to another Order (or Open
trade/position), a Stop Loss is used to limit losses.
NEVER TRADE WITHOUT A STOP LOSS!
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