Forex Trading in South Africa: Limit Orders

Posted by admin 13/10/2013 Comments are off 689 views

Africa

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Buying or selling the base currency has already been determined by the time you are ready to contemplate limit orders. A failure to recognise what these little gems can do for you could lead to loss. Forex trading in South Africa pairings is already risky. It behooves you to place a limited order when you get into a currency pair with the rand as the quote currency. This eliminates any slippage issues that may otherwise result when you place a market order. Slippage happens because of a time delay in market prices from placing to completion of orders.

Buying Below Prices

A limited order is placed on the initial trade. When you have decided on your position, there will be a form to fill out in your online platform. The first thing to do is select buy. This brings up the trading in South Africa order form. You want to make certain you have chosen the lot size you intend to trade. You will also see a place that usually has LMT or limit. You can leave it at the automatic limit or select a specific price you wish to purchase things at. In most cases if you leave the limit as automatic it selects the price you just requested for the purchase. Until you push send the rates are not locked in. In fact while you are plotting out your limit order the currency rates are moving. They might move up in which case the limit order is ensuring you buy at the lower price you initially selected. To make forex trading in South Africa successful, you want the ability to buy in at a lower price. In the evening you might plot out a trade. You would put the buy in, but it won’t fill until the market opens. At the open the rates have to drop to the rate you have chosen, especially if it is lower than the closing rate.

Selling Above Prices

Selling instead of buying is naturally at a higher price. Just think of it as the opposite. When you sell a currency you expect it to go down in relation to the other currency in the pair. Selling means you go short. It stands to reason if you think a down trend is about to happen that you would want to sell at a higher price and ride the downtrend. To buy in would be folly as you would lose money.

Limit orders can be used for a couple of things. First, you can sell with a limit order to ensure you gain a profit on the downtrend with forex trading in South Africa. Second, if the trend turns upward you won’t buy the currency pair. This is as long as the limit is set to a certain price that would not instigate the sell. The good news is if you plot your position well you won’t be in trouble if the pair trades up instead of down.

 

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