Investing in forex is like anything else in life. There is a right way to go about any kind of business or enterprise. If you want to rise fast, surpass expectations, beat competitors, and remain at the top, there are steps to follow. It is the same with investing. Investors have several ways of dishing out trade instructions. These instructions are called orders. Let's get a firmer grasp of this concept.
What Is an Order?
An order is an instruction issued by an investor to be carried out when certain trading conditions have been met. As a forex investor, you cannot escape the concept of orders. Orders ensure that you can get involved in other activities instead of spending extended periods watching the market. With an order, you can decide when to enter or exit the market and how much loss you can handle.
Types of Orders
There are several types of orders that investors use. They include the following:
There are times when all you want to do is either get into the market or get out of it. In either of these scenarios, a market order is what you need. After placing such an order, your broker (for example, InstaForex) will immediately execute a trade at the best available price. This is the oldest and most popular order type. A market order is devoid of any real analysis. Any entry or exit done is based on the existing market price at that particular instant.
This order is given by the investor to either make a purchase below the market price or sell above the market price at a particular instance. A limit order is placed with a specified limit price either for sale or for purchase. The limit order will not be activated or executed unless the specified target prices are reached. This way, you won't need to spend a large amount of time in front of your screen. You can set these limit prices and go get some rest.
A stop-loss order is an order that closes your trade. That is, it is the last instruction to be executed before a trade is closed. The major aim of the stop-loss order is to limit losses. A stop-loss order may be placed where prices are predicted to be high enough for the investor, just before it begins to make a decline. It may also be placed below the market price. To ensure that no more than a particular amount of loss will be incurred.
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The Right Order
The right order to use depends on the investor and his knowledge of the market. Every order has its place. Also, some trading brokers may not have all the types of orders available on their platforms. All FXTM trading platforms are suited for limit and stop-loss orders. The key is knowledge and practice. A sufficient understanding and use of these orders will help you determine the most suitable ones at any point.