Rendi Adrean

As a new trader, you also need to understand the different types of orders that can be placed for trading. Below is an introduction to some of the most major order types that you will find in the Forex market.

Market Order

This type of order is also known as 'at the market.' Whenever an order is placed for the Forex firm to place the order at the best price that is currently available, it is known as a market order. This can be either a buy order or a sell order.

Entry Order

When a request is made from a client for the firm to sell or purchase a specific amount of a specified currency pair at a very specific price, the order is known as an entry order. The order will only be filled when the price that has been requested as been reached.

Read More: Chapter 1: The Basics of Forex Trading

Stop Loss Order

When an order is placed in order to close a position after it reaches a specified price, the order is known as a stop loss order. This type of order is used for the purposes of limiting the loss of a trader.

Take Profit Order

When an order is placed for the purposes of closing a position when a profit that is pre-determined is reached, it is known as a take profit order. This type of order is used for the purposes of locking in a profit amount.

Good Until Canceled

This type of order is sometimes simply abbreviated as GTC. Most orders are actually Good until Cancelled, which means that the order will remain good until it has been cancelled. The trader will need to specify that they wish the order to be canceled before it can actually expire.

Read more: Chapter 2: The Terms in Forex Trading

Margins

The term margin refers to the amount of equity that is required to be maintained within a trading account for that position to be kept open. In many ways, the margin is like a type of good faith deposit. It helps to protect against trading losses.

Exotic Pairs

If you thought that currency trading sounded boring, think again. Just like there are exotic bets for all kinds of sports bets, you can also have exotic pairs in the Forex market. Exotic pairs are comprised of one major currency that is paired up with the currency of an economy that is considered to be emerging. What is an emerging economy, you might ask? An emerging economy would be one such as Mexico, Brazil, etc.

Naturally, exotic pairs are not traded as frequently as the crosses or the majors; therefore, you can usually expect that the transaction costs associated with these pairs are usually going to be higher. The spread on an exotic pair can even be three times as high as a major pair, so it is always important to make sure you take that into consideration when deciding whether to make a trade.

Read more: Forex Robot Reviews of the Best FX Programs

Liquidity

Besides the fact that the online forex trading market is significantly larger than other financial markets there is also one other major difference and it is the fact that the entire foreign currency exchange market is operated electronically. There is not a central exchange or a physical location for this market. Also, it is operated continuously, without stopping, over a 24-hour period.

As previously mentioned, some currencies are traded much more commonly than others. A number of factors can determine this, including:

• The trading counterpart’s reputation
• How attractive prices are
• Trading conditions

As a result, some currencies are naturally more popular than others. The dollar, for example, comprises around 85% of all traded transactions. The Euro comes in at around 39% and the yen comprises about 19% of all transactions.

Speculation

Another important guideline to keep in mind about the Forex market is that currency trading is almost always conducted on the basis of speculation. What does this mean? Essentially, it just means that trading volume stems from traders that purchase and sell based on price movements throughout the day. Due to the sheer size of the speculative market, the liquidity or the amount of buying and selling that is occurring at any particular time is quite high. The good news for you is that as a new trader, it can be relatively easy for you to buy as well as sell different currencies.

Liquidity is very important to investors of all sizes because it is liquidity that determines how easy it is for prices to change over any time period. When a market like Forex is highly liquid, it makes it possible for massive trading volumes to occur without there being hardly any effect on price. Ultimately, this means that the depth of the market can change based on the time of day and the currency pair.

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