In the Forex market, there are the following types of orders:
1. Market orders
Market orders – provide the fastest possible execution in any situation and under any market volatility.
In this case you do not know exactly at what price your order will be executed.
2. Limit Orders
Limit orders – allow you to choose at what price you want to execute the order.
These orders are useful for working with tools with low volatility, as a guarantee that your order will be executed at specified by you or better price.
3. Stop-limit order
Stop-limit order – is a complete control over the situation. Like a stop order is executed only when the specified price is reached.
In contrast to the stop order, a stop – limit order becomes a limit order rather than a market order at the specified price.
The drawdown on these orders is possible the same as the limit, that is, if the price is not reached, the order will not be executed.
All pending orders can be put inside the spread at a minimum distance of 1 fractional (a small pip, or 5 digit after the decimal point) from the market.
Main differences of 3 types of orders
Thus, the main differences between the types of orders:
- Limit Order – is guaranteed the specified price, there is no execution guarantee;
- Market order – is guaranteed execution, but the price isn’t guaranteed;
- Stop Order – becomes a market at the moment of achievement of the specified level of the price.
You must constantly monitor your orders
The technical capabilities of Metatrader allow you to display the price chart, but, unfortunately, do not reflect the full situation on the market, namely the presence of the price and number of ticks at this price.
Often at achievement by the order of the necessary price, it exists too small period of time and the market leaves from it therefore the order doesn’t manage to be executed in view of the fact that the software system of execution of orders had no time to process this order.
It also requires a sufficient volume to execute at that price, if the volume was dismantled, then it could be not enough, and therefore an order is not executed.
Pay attention that feature of execution on bank means by itself at first a covering of demands with large volume and in the last turn with the smaller.
Professional traders understand that according to statistics, even on a regulated stock markets is not executed on the spot prices up to 20% of all orders.
It needs to be considered in the strategy and be taken for statistical norm.