Generally, the types of order in forex is divided into market execution and pending orders.
You can order instantly (It is known as Instant Order and Market Execution) or later at a predefined price, known as pending order.
Additionally, you can order at a specified price if the price reaches known as pending orders.
In the following, I have explained them in more detail. Continue reading.
Market Execution
Market Execution is an option that you can place immediately. It happens in milliseconds.
It is the most widely used one among types of order in forex.
Depending on your broker, the execution time can be short or long, but less than a second.
The time of execution also depends on your internet connection strength. A slow connection can delay it.
Pending Orders In Forex
Pending order in forex is an order in which trading software places it after meeting a predefined condition.
Generally, traders set pending orders above or below a chart pattern, and hope to be right.
A pending order can be placed for a specific period, for example, one day. If the price reaches during a specified time, the order is executed. Otherwise, it is canceled automatically.
You can also cancel it before the expiry date.
Moreover, a pending order can be Good Till Canceled (GTC), which means the order will be executed if the price reaches the specified point anytime unless the trader cancels.
There are six types of pending orders, and they are:
Buy Limit
Buy Limit is an option allowing you to buy lower than the current price if the price goes down. Traders use this option to place a trade forecasting a pullback.
Sell Limit
The sell limit allows you to sell higher than the current market price if the price rises higher. Traders use this option to catch oversold conditions.
Buy Stop
Buy Stop allows you to buy at a price higher than the current price. Traders use Buy Stop to predict a pattern breakout.
Sell Stop
Sell Stop allows you to sell at a price lower than the current price. Traders use this option to place a trader if the price breaks a pattern or a channel.
Buy Stop Limit
Buy Stop Limit combines the Stop Order and Buy Limit order.
In this type of pending order, you define two prices, the “Stop Level” price and the “Buy Limit” price.
The Stop Level price should be above the current market price, and the Buy Limit price should be below the Stop Level price (the stop limit price can be above or below the current market price).
As soon as the ask-price reaches the Stop Level price, a “Buy Limit” order will is triggered automatically. If the price touches the Buy Limit order, the trading software will buy instantly.
Sell Stop Limit
In this type of order, like Buy Stop Limit, you define a Stop Level price and Sell Limit price. As the bid price touches the Stop Level price, a Sell Limit order is placed. The Sell Limit price is above the Stop Level while the Stop Level price is below the current market price.
