Forex Trading Strategies and Order Types

Posted by admin 10/02/2014 Comments are off 700 views

Forex Trading Strategies on Orders

This article looks at the order types that you are going to use with forex trading strategies.

There are a number of different order types that you need to know about when you look at forex trading strategies.  These different order types will be used by the different forex trading strategies that you are going to consider.  It is important that you know about the different order types and what they mean.  When you know this you will be able to determine what the forex trading strategies are going to be doing on the market.

Long and Short Orders

When you look at forex trading strategies you will find that they often talk about long and short orders.  It is important that you know what this means because it affects the way that you are going to be trading on the forex market.  If you do not know the difference between long and short orders you could end up trading in the wrong direction.

The long order is entered when you are trading on a rising price movement.  This means that when you trade on an uptrend you are going to be placing a long order.  The short order is when you are going to trade on the downward movement on the market.  This means that when you trade with a downtrend you are going to open a short trade.

The Market Order with Forex Trading Strategies

The market order is the most common order that you are going to use with forex trading strategies.  The market order is also the most basic of order types.  When you use this order you are going to tell the broker to complete the transaction at the market rate.  This means that if you place a market order at 1.2064 then this is the price that the order will be executed on.

The market order is the most reliable of the order types because it is completed at the time it is placed.  However, when you use the market order you are not guaranteed the price.  When you use the market order you could have slippage which means that the price of the order is not the price that the order is executed on.  There are a number of ways that you can avoid slippage and you should consider what they are.

The Limit Orders

The limit orders that are most commonly used in strategies are the buy and sell limit orders.  When you use the buy limit order you ensure that your trade is carried out at a specific price or better.  This allows you to set the desired price that you want the order to be executed at.  While the limit order does stop the chance of negative slippage it will not guarantee that your order is filled at the desired price.

Another problem that you can face with the limit order is that the order is never executed.  This will happen if the price movement never reaches the price that the limit order is set to.  When this happens you will not be able to make the profit that you want from the trade.

 

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