Types of orders in forex trading on mt4/mt5


Similar to "order" in a restaurant; in Forex trading, the word order indicates how we want to "order" something, exactly what is ordered and want to order for now or later.

Whether to buy/sell at what price, how the trading position will be closed, and so on. Everyone can determine different methods of determining the way to open and close a position, so there are various types of orders in forex trading.

In general, traders only know about Market Orders and Pending Orders. However, if discussed in detail, there are actually many types of orders in forex trading.

Here's the list of order in forex trading (especially on mt4/mt5):

1. Market Order

This is the simplest type of order in forex trading. Market Order is a type of Buy/Sell order at the best price available on the market.

For example, prices in USD/JPY are currently at 109.838 If we want to Buy USD/JPY at market prices, then it will be "sold" to us at a price of 109.852 (Ask Price).

We will click "buy" on the trading platform, and the platform will immediately execute a buy order at that price. 

2. Limit Entry Order

A Limit Entry Order is a type of order in forex trading that is placed to Buy below the current market price or Sell above the current market price.

For example, USD/JPY is currently trading at the price of 109.858. We want to open a Buy position if the price has dropped to reach 108.800.

To do this, we can just wait until when the price reaches 108.000, then just click Buy with Market Order.

However, we can also install Buy with the Limit Entry Order now, then leave. If later the price drops to 108.800, the trading platform will automatically open short positions at the best price at that time.

3. Stop Entry Order

Stop Entry Orders is also one of the types of Pending Orders, but their functions are different from the Limit Entry Order. A Stop Entry Order can be used if we want to open a Buy position above the current market price or sell below the current market price.

This is used if we estimate the price will continue to move in the same direction. For example, USD/JPY is currently trading at 109.846 and appears to be moving upwards.

We think that the price will rise faster and again higher when it has touched 111.412. Next, we can wait until the price reaches 111.412 and then just click Buy with Market Order, or now we also install Stop Entry Order at 111.412.

Later, because there is a Stop Entry Order, the Buy trading position will be automatically executed immediately when it reaches the specified price, even though at that time we are not glaring at the computer.

4. Stop Loss Order

A Stop Loss Order is not used to open a trading position, but is used to prevent a more severe loss if the price moves in an unexpected direction.

This type of order is installed after or together with when we open Buy or Sell with any type of order and will continue to apply until the Stop Loss Order is revoked or our trading position is closed.

For example, let's look again at the Market Order image in number one. Along with when we open a Buy trading position, we also specify a Stop Loss at the price of 108.838 and the Target Profit at 111.411.

Our expectations, of course, prices will rise until they reach the target. However, the forex market is very uncertain.

If the price does not continue to rise, but turns down to reach 108.838, then the trading platform will automatically close the trading position at that time with our results Loss. 

"Trading positions is closed automatically with a loss" it sounds really bad.

However, it could be better than if the price turns out to move up to 107.000, and we don't install Stop Loss at all, then it turns out that the loss is even worse! Stop Loss Order is very useful if we do not want to sit in front of the monitor, watching all day, after opening the position.

5. Trailing Stop

Trailing Stop is a variation of Stop Loss Order placed in a trading position, but can move along with price fluctuations.

Once a Trailing Stop moves, the new level changes to a Stop Loss for that trading position. This move will continue as long as the price shifts according to a predetermined interval.

In the Buy scenario, Trailing Stop cannot go down after moving up; while in the Sell scenario, Trailing Stop cannot rise after moving down.

Let's say there is a Buy position of USD/JPY at 109.852, with a 20 pip Trailing Stop interval.

This means, the initial Stop Loss is at 109.652. If the price turns up to 110.252, then the Trailing Stop will move and be locked at 110.052.

So, for example, the price then turns down again to 110.200 for example, then the position will remain at 110.052.

Suppose the price drops again to 110.000, no need to worry because the trading position automatically closes at 110.052 and you have managed to secure profit to that level.

6. Uncommon Order Types Used

The description above is a type of order in forex that is commonly used by traders.

However, when a trader is more experienced and has more capital, he can use several other types of orders that are not commonly used. Among them:

Good For the Day (GFD)

GFD orders will be active in the market until the trading day ends. But because the forex market lasts 24 hours, it is better to check with the broker to find out what time exactly the trading day ends.

Good Till Canceled (GTC)

GTC orders will remain active in the market until we decide to cancel them. The broker will not cancel the order unilaterally.

Therefore, we must be careful in applying it and remember carefully if we have scheduled this order in trading.

One Cancels the Other (OCO)

OCO orders can be said to be a combination of two orders plus Stop Loss. Two orders with different prices and durations are placed above and below the current price.

When one of the orders is executed, the other order is canceled. For example, the price of EUR/USD is currently 1.2040.

We want to make a Buy at 1.2095 or Sell if later the price falls to 1.1985. Well, after OCO was installed, it turned out that prices rose and reached 1.2095.

At that time, Buy orders were automatically running, while the 1.1985 Sell orders are canceled.

One Triggers the Other (OTO)

This is the opposite of OCO, because the order will run only after the initial order is executed. For example, USD/CHF is currently trading at 1.2100.

We think, after touching 1.2100, the pair will turn and decline to 1.1900. Well, the problem is, we don't want to glare at the computer.

Therefore, in order to still be able to "catch" opportunities even if not at the computer, we can sell Limit pairs at 1.2000, as well as install Buy Limit at 1.1900, and just in case, Stop Loss at 1.2100.

As an OTO, Buy Limit and Stop Loss order, it will be placed if your first order for Sell is 1.2000 runs.

Remember, not all brokers provide all types of orders. So, if we want to use a type of order, make sure our broker provides that type of order.

Well, if you are still confused about how to use various types of orders in forex trading? Practice directly with virtual funds on a demo account.