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A Quick Review on Placing Orders with Brokers2017-02-17 12:46:01
Let’s have a refresher on the proper manner of placing orders with a forex broker. This is important because any inappropriate order execution can greatly affect a trader’s plan to enter and exit the market.
Here are the three kinds of orders:
A trader places this order if he intends to enter a new position or to exit the current one at a specified price or higher. A limit order is executed if the indicated price (or better) is reached. It also enables an investor to curb the duration that an order can be outstanding before being repealed.
Limit-buy orders purchase the currency pair at the market price if the set price is hit or lower, while limit sell orders sell the pair at the rate if the specified price is obtained or greater. Traders normally use this type of order to determine their financial goals or objectives or to enter the market when the rate surpasses a resistance or support level unexpectedly.
This default order is carried out when an investor wants to buy or sell shortly at the best available market rate. Also known as the unrestricted order, it is likely placed since it does have any limitations on the price or the timeframe in the placement. The order has low commissions due to its minimal work brokers have to fulfill.
It is executed once an indicated price is touched at a certain point. Buy stop orders purchase a currency pair at the market rate if the specified price is hit or higher, while sell-stop orders sell a pair at the market rate if the target price is reached or higher. A trader places such an order to protect their gains, to curtail the losses incurred, or to get into the market in the event of breakouts. They often use stop order if they cannot track their portfolio for a longer time period.
As we enter 2017, it is important to know or revisit the three common types of orders to enter the market properly, to maximize profits, and to minimize losses. Do the order execution the right way or lose the money.