Types Of Forex Orders: Understanding The Difference

forex orders

Understand the different types of forex orders when trading on the most volatile and largest market globally is very important as Forex surpasses a daily trading volume of 5 trillion dollars. Any form of capital loss increases the risk of trading. As such, highly specialized risk management systems minimize encounters with negative trading. Traders on forex use several trading orders to manage their trades.

The types of orders differ between brokers, basic forex order types, and acceptance. Basic understanding of the types of forex orders can help a trader perform smoothly on the live market. Types of forex orders allow trendy trading styles and provide stability, especially for the trader.


Importance of Using Forex Orders

The forex market is nobody’s friend. Steer clear from considering your experience with the forex market for your future investments. No matter how much preparation you undertake, how elaborate your plan is, and how distinct your strategy flows, the forex market remains your enemy in disguise. Apart from trading, pay extreme caution while selecting the broker. 

Brokers stand below goodness and above enmity. They are sometimes the advocates of volatility. Make sure to appoint a licensed forex broker, especially someone who is aware of trading. Licensed brokers allow using forex orders. Not all brokers advise forex orders for live trading. Forex trading is risky, but the potential opportunities make it irresistible. 

Forex orders help you restrict the unpredictable. No matter the number of safety measures, the risk of losing somewhat prevails.



Let’s take a look at the types of forex orders.


Types of Forex Orders

Types of Forex Orders – Profit Booking Order 

A profit booking order is an order employed to square off a long open position. What falls under the purview of a profit booking order are specifications of trade. The specifications lay the conditions that can help a trader square of a long open position. 

For example, a trader can execute a trade if profit reaches 20%, or increase price up to 25%, which is a specification. This specification can be found under the profit booking order, enabling traders to book profits in a live market.

Live market experiences drastic price changes and manual placing of orders. To expedite the process, profit booking order specifications are a prerequisite because the manual placing of an order takes a lot of time.

Types of Forex Orders – Limit Order 

Like the name suggests, the order can be executed only at a specified price. The price is termed as the limit. The specified price can be increased for better earning but not decreased. The limit order is usually given to the broker to execute buying or selling within a defined price. Any form of trade can be e undertaken. For example, buying currencies or investment options. 

The limit order performs in a way where the broker/trader/investor is bound to make a profit (in most cases). For instance, he will have to buy a currency below the market price or sell them above the market price in terms of buying currencies. In both conditions, the endgame relates to profit. 

The purpose of this order is to restrict the risk of sudden price fluctuations. Incorporation of the limit order into the risk management system is highly advised.

Types of Forex Orders – Market Orders 

This is the most basic form of forex order. Traders come across market orders as the first type. Working similar to its name, market orders are traded in the market. 

If a trader wants to dive into the forex market under an urgency or an immediate requirement, market orders can opt at the prevailing price. When it comes to market orders, scalpers and day traders take the lead. 

They take help from market orders to enter and exit the market quickly while adhering to a pre-formulated strategy. For example, the trade of currency can be executed under market order at the prevailing price. Here traders do not look for a win-win situation. Market orders usually employ short positions. 

Types of Forex Orders – Stop Order 


Stop orders are obtained under favorable conditions. If a trader finds the market moving in its favor, he may choose to enter a stop order. This is usually practiced when the market performs in a range. Traders choose to perform the trade in the form of a breakout of the range. 

If you are a trader, you can put a buy stop order at the breakout price. In such a scenario, if the live market operating under the stop order hits the breakout price, only then you will be filled on the trade. 

After that, you can take the market for long. One primary advantage of a stock order is, traders enter with momentum. Keep a check in cases of false breakouts. 

Types of Forex Orders – Take Profit Order 

As a trader, take profit order involves an order you give to the broker. Take profit orders to close a trade automatically. An automatic closure takes place when the market reaches a certain point in the trader’s desired direction. 

The markets are volatile, and price changes rapidly. Circumstantially, the price can unexpectedly reverse. Therefore, traders ensure to set a profit value, to take whatever profit happens automatically, before the market moves in the opposite direction. 

A stop-loss order usually performs with a take profit order in the form of a risk to reward ratio. The ratio of the amount of taking profit order pips to the amount of stop-loss order. 

Types of Forex Orders – Stop Loss Order 

A Stop-loss order closes an order if the market reaches a specified price level. The specified price can indicate a profit or a loss. Stop-loss order functions to prevent additional losses if the price backfires.

If the trader is in a long position, usually, a sell stop-loss order is undertaken. The short positions employ a buy stop order. Stop-loss order cannot be closed immediately. After the market reaches a specified price, the liquidation of a position determines a stop-loss order’s cancellation. For example, in the exchange of currencies, you can set your limit to a specified price. 

After that, the market raises or lowers the bar as soon as it reaches the specific price. In this scenario, a stop-loss order comes into action. If the price specified by the trader is dead wrong, and the market drops, the platform automatically executes a sell order at the specified price. This is done to ensure the best available price closes the position for whatever loss has been incurred. 

Types of Forex Orders – Dependent Order 

The forex market allows traders to create options and trade. With dependent orders, whoever plans to invest in a forex market, can place two orders simultaneously. Once the simultaneous orders are fed into the live market, only one order gets executed based on the market conditions. 

Alternatively, dependent orders trigger the placing of one order for another, sometime in the future. Investors and traders employ dependent orders to create complex algorithms so that human intervention is minimal. 

The forex market is in the phase of applying artificial intelligence for executing trades. Once artificial intelligence takes over human intervention, dependent orders may lead to the list.

Types of Forex Orders – Entry Order 

Entry orders rank below the market order. They are unique in a way and can be set away from present market prices. Often live trading takes place at pre-selected prices. Pre-selected prices open the gateway for entry orders. 

They allow the entry order criteria to be met and facilitate the creation of a new position. Entry orders come along several benefits. You do not have to sit in front of the computer the entire day to deal with the trade.

Entry orders are also employed for breakouts, and often trades that demand execution when the market fluctuates, the specified price passes a certain point. 

Types of Forex Orders – Trailing Stop Order 

Open positions are the stop-loss order’s best friend. They are always automatically moving when profit becomes equal or higher than the specified price. A trailing stop order is categorized under the stop-loss order that moves according to the price fluctuation. 

For instance, if you decide to buy currencies at 90 rupees, a stop-loss order would ideally stop the deal at 91. What if the price goes down and hits 89?

A trailing stop order moves to 89 and reaches a break-even. After that, the stop loss will stay at the new price level. It will no longer increase even if the market goes high against your trade. A trailing stop price getting equal to the market price, closes a position at the best available price. 

In Summary

Several other orders remain active in the market until you decide to cancel it. One such example is the GTC order. On the other hand, the basic orders that include those mentioned above are most trader’s needs. Make sure you study enough to trade on a forex market.

There is always a trade off when you decide to go for a limit order instead of a market order. Gather knowledge of the basic stuff first. Your broker’s order entry should amplify your understanding. In case of specific order information, have enough clarity from your broker. Check if a rollover fee is applicable.