Posted on Wednesday, 10th March 2010 by Investment Expert
If you are disorientated in a large amount of complexities of Forex trading, ask for information you need. There are many nuances. Here we’ll give you one of classifications of orders.
This classification is usually used in the cases, when the trader trades through the dealer of dealing company, instead of gaining access to the contractor directly. These are modifications of orders, created to preclude the possibility of wrong interpretation of trader’s request and to facilitate his work.
1. GTC
GTC orders (Good Till Canceled) are orders to buy or sell at given price and at a certain value, which can be worse and better than the market price.
It can be used both for opening a new, and for closing an old position.
2. Take-Profit
Take-profit orders (or Limit-profit) are the orders to buy or sell currency at the price, which is always better than the market price, linked to the concrete open or opening position.
Generally, these orders are used for fixing a profit from favorable change of price.
It happens, that Take-profit order is given not for closing the open position with the profit, but with the purpose of minimization of losses.
3. Stop-Loss
Stop-Loss orders are the orders to buy or sell currency always at a worse price than the market price, linked to the concrete opened or opening position. Usually, these orders are used for limiting losses from unfavorable change of the price.
It happens that Stop-Loss is given not for limitation of losses, but also for non-admission of profit crunch.
Different brokers can execute stop orders differently.
The first variant: the order is executed precisely at the set rate, when it is reached in the market. The second variant: the order is executed at the quotation following the set in the order, this quotation can differ from the ordered by some points. This phenomenon is named Slippage.
Of course, the first variant is more favorable for a trader.
If the stop order is left for the weekend and there were serious events affecting rates of exchange, rates of market’s opening can strongly differ from the rates of closing, and stop order can be executed with big slippage.
It is necessary to remember that buy orders are executed, when offer, not bid, reaches the moment noted in the order.
You should also understand that the order has no direct link with an open position. For example, if the order was placed for closing a position, but then the position was closed manually, before execution of the order, it remains valid and if it is activated, new position will be opened. That’s why it is necessary to give due weight to placing the orders, to controlling its execution and to canceling the unnecessary orders in time.
The choice of a foreign currency trading service is not an easy task. And one shouldn’t dash to make a decision on such a service.
It is very important that you follow a final piece of advice - today the online technologies give you a really unique chance to choose what you require for the best price on the market. Funny, but most of the people don’t use this opportunity. In real life it means that you should use all the tools of today to get any foreign currency trading info that you need.
Search Google or other search engines. Visit social networks and check the accounts that are relevant to your topic. Go to the niche forums and join the discussion. All this will help you to build up a true vision of this market. Thus, giving you a real chance to make a wise and nicely balanced decision.
And also sign up to the RSS on this blog, because we will everything possible to keep updating this blog with new publications about the topic of how to trade foreign currency and important trends on the currency exchange market.
Tags: foreign currency, foreign currency trading, forex, forex trading, online forex trading
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