Types of Trading Orders in Forex

There are different types of trading orders in the market, and they can be divided into two main categories:

1. Market Orders

These orders are executed immediately at the current market price or the best available market price. Examples:

BUY: To enter a new buy position at the current market price.
SELL: To enter a new sell position at the current market price.
CLOSE: To close an open buy or sell position at the current market price. This is the reverse operation of the original buy or sell trade.

2. Pending Orders

These orders are set at a specific price and are executed when the market price reaches the specified level. Pending orders are

divided into two sections:

Section One: Orders for Entering a New Position

BUY STOP: A pending order to buy at a price higher than the current market price. This order is often used when a breakout occurs above a resistance level.
BUY LIMIT: A pending order to buy at a price lower than the current market price. This order is used to enter a buy position at a better price, often before hitting a strong support level.
SELL LIMIT: A pending order to sell at a price higher than the current market price. This is used when you expect the price to reverse from a resistance level.
SELL STOP: A pending order to sell at a price lower than the current market price. This order is placed when you expect a breakdown below a strong support level.

Section Two: Orders for Exiting the Current Position

TAKE PROFIT: A pending order used to close a position automatically when the price reaches a predefined level, locking in the profits.
STOP LOSS: A pending order used to close a position automatically when the price reaches a predefined level, limiting losses.

Explanation of Pending Orders to Enter a New Position:

BUY STOP: A pending buy order placed above the current market price. This is often used when price breaks through a resistance level. Example: If the current price of EUR/USD is 1.1130 and you expect the price to rise after breaking a resistance at 1.1150, you can place a BUY STOP order at 1.1165.
BUY LIMIT: A pending buy order placed below the current market price. This order is used when you want to buy at a better price, usually before a strong support level. Example: If the current price of EUR/USD is 1.1177 and the price is within an upward trend channel, you can place a BUY LIMIT order at 1.1140, which is the support level of the channel.
SELL LIMIT: A pending sell order placed above the current market price. This order is used when you expect the price to reverse from a resistance level.
SELL STOP: A pending sell order placed below the current market price. This order is used to enter a sell position when the price breaks below a strong support level.

Important Note:

Many trading platforms now only use two types of pending orders for entering positions: BUY and SELL. The platform automatically determines the order type based on the current market price.

Exit Orders:

TAKE PROFIT: This order automatically closes a position when the price reaches a specific level, allowing the trader to lock in the profit.
STOP LOSS: This order automatically closes a position when the price hits a predefined level, limiting the trader's loss.

Stay tuned for the next lesson to learn more about the forex market!