THERE ARE FOUR MAIN TYPES OF ORDERS IN FOREX MARKET

There are many kinds of orders which traders can place to transact in the F0rex market, for making money out of it.

MARKET ORDER

The market order is the most simple and common kind of order. Here, the trader buys and sells the currency at the rate prevailing in the market at the time of placing the order.
Due to the huge size of the market and high volatility trends can reverse at any instant, so traders prefer placing orders at the market price to guard themselves against any adverse trend.

LIMIT ORDER

In this case, the trader specifies a price at which he or she may wish to buy or sell the currency.Suppose a trader has bought GBP against the USD at 1.970, then he or she can place a sell order at 1.9725, when the exchange will execute the order and he or she will profit from it. The order will get cancelled if the target price is not achieved during the course of the day.

STOP LOSS ORDER

Now, due to the volatility, stop losses are essential. They determine the maximum loss a trader is willing to endure. let's suppose in the above instance, the risk-taking ability of the trader is low, then he or she may place a stop loss at 1.9705, at which level the exchange will book losses for the trader, and he or she won't be affected by any fall below 1.9705.

ENTRY ORDER

Such an order is filled only when certain conditions are met in the market, which the order specifies. The entry order can be a limit entry order or even a stop entry order.

-LIMIT ENTRY ORDER

As an example, let's assume that the current market price for GBP/USD is 1.9705-10. This implies that the trader can transact at these levels. Here, a trader can put a limit entry order to sell his or her holdings at a price higher than the market price, say 1.9715. His or her order would be executed only if that price is attained. In the similar, he or she can place an order for buying at the level of let's say 19700, and his or her order would remain pending till the price falls to that level.

-STOP ENTRY ORDER

Such an order is generally used when the trader has sufficient grounds to believe that the currency is trading in a fixed range and believes that it is on the verge of a breakout from that range. He or she might want to buy at a price higher than the market price or sell at a lower price than the market price. In the same example, the trader may go ahead and buy at 1.9720 or sell at 1.9690, where he or she believes that once these levels are attained, the currency will only go up or fall further, as the case may be. A trader has reasonable grounds to believe that there will be sharp movements in the currency rates in the Forex market.