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Different trading scenarios and Forex trading strategies require different market entry and exit orders. Sometimes a simple entry at the current market price is required but at other times a pending order may need to be programmed with the required entry and exit points. The types of orders we discuss in the Forex training video above are as follows:
Market order - this is the simplest way to enter the market, whether you are going long or shorting. By taking a market order, a trader enters the market at the best possible price at that given time. The order is filled straight away.
Buy limit - this order anticipates a bounce in an upward direction from the current down-trend. Therefore, an entry point is created below the current market price. Once the entry price is reached the order is triggered to go long. The stop loss is below and the profit target is above the entry level.
Sell limit - opposite to the above, this order type anticipates the market to bounce downwards from the current up-trend. An entry point is created above the current market price. Once that price level is reached, the order is triggered to go short. the stop loss is above and the profit target is below the entry level.
Buy stop - this type of order anticipates the current up-trend to continue rising. Therefore, an entry point is created above the current price. The stop loss is below and the profit target is above the entry level.
Sell stop - this type of order anticipates the current down-trend to continue falling. Therefore, an entry point is created below the current market price. The stop loss is above and the profit target is below the entry level.
Stop loss - this is the point at which the market proves you are wrong - no matter what type of order you are using. Traders should always trade with a stop loss. If a trade is wrong and the market goes in the opposite direction of the trade, it is the safest and quickest way to stop any further losses.
Profit targets - this is the end point for your order i.e. the point at which you have made the required profit and you are closed out of the market.
To practice and see how the above factors work on a chart, please open a 'demo' account from one of the brokers on our Forex brokers page. Once you have an account you can set various price points in above formats and see how the trading platform reacts to the automation.