Types of CFD Orders

1. Market orders

If your trade is a market order, it will go straight into the market. This is also known as “At Best”; in other words, you’re asking the broker to buy or sell on your behalf at the best rate currently available on the market. This is the most common type of CFD orders. For this trade to be executed, the market needs to be open.

2. Pending orders

A pending order is the trader’s instruction to the broker to buy or sell a security in future, under predefined conditions, when the price reaches a specific level.

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3. Limit orders

The most popular pending order is a limit order or “At Limit”, which means if price equals your limit, your trade becomes a market order.

With Deriv as your broker, you can have your order filled at a price that is equal or better than the limit you’ve set. For example, imagine you want to buy (go long) Apple, but you don’t want to pay more than $120.00 a share upon entering the trade. However, Apple shares are currently trading at $122.00. You can place a limit order that tells Deriv to only buy Apple if and when the offer price is $120.00. This can be “good for the day” (GFD) or “good till cancelled” (GTC), so the order will roll over to the next day. In either case, when the stock price reaches the price you’ve set, you can’t cancel or amend your limit order.
You can also use a stop order to gain more control as explained in the next section.

The most popular pending order is a limit order

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Stop orders

A stop order is an instruction that says if X price is reached, then buy or sell. Most traders use a stop order as a safety net, especially if they are not monitoring a stock closely. When this order is exe-cuted, the trade is completely closed. A stop order can be set for a limited period or for an indefinite time, ( a “good till cancelled” or GTC order). In either case, when the stock price reaches the stop price you’ve set, you can’t cancel or amend your stop order.

If you set a stop order, the broker will always try to fill your order at the price you’ve set, but if that price is unavailable, your order will be executed at the next available price. In other words, a trade with a stop order is always filled at either the price equal to the specified one or the next available price (slippage). But in any case, the execution of stop orders is guaranteed.

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Where to put a stop?

It is always a trade-off between having a close stop, minimising Losses, and giving a trade enough space to breathe at the risk of a Larger loss.

A 20-day price channel can give you an idea for stop loss. Here we see Apple with a 20-day high/ low chart. Say you were to go long on Apple. You would place your stop at the 20-day low price. As the price moves up, so does the 20-day low, and you are locking in profits.

This strategy is also known as trailing your stop. Think of it as a safety net. As Long as the stock keeps going higher, you stay with the trade and keep moving the stop up. Of course, at some stage, the trend ends, and your stop will close you out.

Remember you can do the exact opposite for a short (down) trade, so your stop would be the 20-day high.

Further on, I will show you how you can use these price channels as a trading system.

Apples's 20 day price channel

Stop limit orders

Stop Limit orders are a combination of stop orders and limit orders. If the stock price reaches or passes the stop price, a limit order is placed at the set price, and your order will be filled at a price equal or better than the set price.

Take profit orders

Take profit orders help you make a profit when the stock price reaches a level of your choice. When this order is executed, your position is completely closed.

A limit price, a stop loss price, and a take profit price for the US 30 (DOW Jones or Wallet Street 30)

A limit price, a stop loss price, and a take profit price for the US 30 (DOW Jones or Wallet Street 30)

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