Order types: Take Profit, Stop Loss and others

Take Profit, Stop Loss, Market and pending orders

There are several types of orders on the Forex market helping traders control their trading. To start with let's consider the term "order".

Order – is the warrant to dealer or broker for conducting operation for purchase-sale of certain number of currency lots as per specified price and at a certain date.

Take profit is the order you set to remove a position once it reaches a certain level of profit.

Stop Loss is  the order you set to close  a position to avoid the price  goes in a loss-making direction.

 

Main orders types:

Market Order – an order for purchase-sale of currency pair at present price. Execution by broker of this order leads to an immediate opening of trade position. Currency is bought at ASK price, and is sold at BID price. This is the fastest way to open position, but it should be noted that under high volatility "Market" order is not the best possible option.

Pending Order – an order for the future purchase-sale of currency pair at specified price. It is used for opening trading position on condition that future quotes are equal to preset level. Its advantage is that broker will fulfill it regardless of connection with trading terminal and server. In this case trader does not have to stick to market all the time. Broker can remove order only if margin is insufficient. In other cases order is effective until it is fulfilled, expired or canceled by trader.

Pending Order

There are 4 types of pending orders supported by the terminal MT4:

Limit Order: buy limit, sell limit.

Buy limit – is an order for purchase at lower price than the price in the moment of sending warrant. With the help of such order, trader relies that price will decline to a certain level, upon reaching which the price starts growing.

Sell limit – is an order for sale at higher price than the price in the moment of sending warrant. With the help of such order, trader relies that price will grow to a certain level and then will start falling down.

Stop Order: buy stop, sell stop.

Buy stop – is an order for purchase at higher price than the price in the moment of sending warrant. With the help of such order, trader relies that price will grow to a certain level and then will continue with growth.

Sell stop – is an order for sale at lower price than the price in the moment of sending warrant. With the help of such order, trader relies that price will decline to a certain level and after will continue decline as well.