Types of orders in Forex trading
You can choose various types of orders when you start trading with a Forex broker. By optimally utilizing your opportunities you can maximize profits and reduce risk as much as possible.
A market order may be seen as a direct order. The broker will try to open the order as soon as possible. The accrued profits or losses will be added to your position instantly. You can read more about profit and loss in CFD trading in our specially classified article.
A limit order is an order that is executed only when a certain price value is reached. As you probably know you can either go long or short. By setting a limit order at a low value (buy) or at a high value (sell) you can open positions strategically and fully automatically and thus make money.
For example: if during a certain week the price continuously bounces from a certain resistance level you can place a limit order on this resistance level. If subsequently the price reaches the resistance level a position will be opened automatically. In most cases the price will not break through the resistance level, the price will decline again and you will make money.
Stop loss / take profit order
Additionally it is possible to place a stop loss or take profit order. The position is then automatically closed at a certain price. It is always recommended to place a stop loss: it is the best way to limit and determine your maximum loss.
A trailing stop can be very attractive if you expect a price increase followed by an almost immediate correction. A trailing stop is in fact a moving stop loss. You set a certain value for the trailing stop and when the difference between the highest recorded price after opening and the current price is more than this value the position will be closed. The trailing stop is actually a dynamic stop loss.