List of Order Types and How they work on Forex trading platforms

Use Order Types to manage risks
List of Orders Types and How they work

Use Order Types to manage risks

Open positions should always have a stop order of some kind attached to them.

Attaching a stop order allows traders to limit their risk to a pre-determined level and are also the fundamental backbone to a serious trading strategy.

Any popular trading platforms such as MT4 and MT5 offer many order types which can all be used to manage risk in different ways.

Some orders may be listed in abbreviations as GFD or GTC, shorthand for Good-For-Day and Good-Til-Cancelled respectively.

Good-For-Day orders are automatically cancelled at the end of each trading day. Good-Til-Cancelled orders remain active until they are either executed or cancelled directly by the user.

List of Orders Types and How they work

Inside all brokerage platforms, providing access to customers to exchange and OTC markets there are different in complexity, but very important program modules.

This is the so-called order entry window.

Order in this case is the form of trade customer orders to his broker, to engage in certain transactions under certain conditions.

In exchange industry there are certain standards and most financial instruments (except for the most exotic) are bought and sold with the help of a group of standardized orders.

Standardization allows you send such orders not only through the electronic platform in the form of computer code, but also by means of a phone call from a client to his broker.
The basic order types that are supported by trading platforms in the financial markets:

Knowing the order types available on your trading platform is important.

You can not only benefit from each features, but organize your trading strategies for a better result.

Here are the popular order types available on many online trading platforms.

1. Market Order

A market order is an order to buy or sell at the best available price.

Market order is the most frequently used order.

This is a good type of order, used as soon as you have made the decision to open or close a position.

This may prevent the client from having to chase the market, trying to enter or exit a position.

A market order is executed at the best possible price available at the time of trading in “The Pit” (exchange).

2. Limit Order

Limit orders allow investors to set a limit price whereby an entrance or exit trade will be executed.

The order is set to buy or sell a specific quantity at a particular price over a chosen time period.

Limit orders may be placed GTC or GFD. Limit orders need not be attached to open positions to be placed – they can be further used to enter the market.

For example, if a speculator is expecting a price breakout after a technical level is breached, they could place a limit or stop order beyond the level to catch the movement.

Limit Order is an order to buy or sell at a certain price.

Limit orders to buy are placed below the market, while limit orders to sell are placed above the market.

Since the price cannot go up high enough or drop low enough to activate a limit order, the customer can miss the market if he uses a limit order.

Execution on this order cannot be guaranteed, if market changes take place in a great pace (usually on the news) or the number of applications for this price was too high.

In the latter case, your order can be failed or executed only partially.

3. Limit Entry Order

This is an order placed to buy below the market or sell above the market at a certain price.

4. Stop Order

Stop orders allow investors to set a stop price limiting downside risk.

Just as a limit order, the order is set to buy or sell a specific quantity at a particular price over a chosen time period.

Stop orders may be placed GTC or GFD.

Both stop and limit orders need not be attached to open positions to be placed – they can be further used to enter the market.

For example, if a speculator is expecting a price breakout after a technical level is breached, they could place a limit or stop beyond the level to catch the movement.

Stop orders can be used for three purposes:

Minimize losses on long or short positions;
Protect the profits of the existing long or short position;
Open a new long or short position.

Stop order for purchase is placed above the market price and the stop order for sale is placed below the market price.

As soon as the “stop” price is concerned, the stop order is regarded as a market order and will be executed at the best price.

When buying, if the price of the order is higher than (above) current market price it is stop order for purchase.

When selling if the price of the order is lower than (under) current market price it is a stop order for sale.

At the moment of touch by the market of the price established in the stoporder it becomes a market order with the exercise of the price stated on the rules of market orders.

In the case of a gap, instead of the price stated in the stop order price, the price of “transformation” of the stop order into market order becomes the first traded price after gap.

5. Stop Entry Order

This is placed to buy above the market or sell below the market at a certain price.

6. Stop Limit Order

Stop Limit Orders turn into Limit Orders when triggered.

Stop limit order is actually composed of two prices, as an attempt to gain more control over the price at which your stop order must be executed.

The first part of the order is written like the above stop order.

The second part of the order determines the price on the limit.

This indicates that once your stop order works, you do not want the order execution at the price worse than the price of limit order.

Stop limit orders are not typically used when trying to exit a position.

If the customer does not give a price for a limit order, the “stop” price and the “limit” price are considered identical.

On the Jiffix Classic platform, you can further set slippage controls for these orders.

7. Stop Loss Order

This is linked to a trade for the purpose of preventing additional losses.

The stop loss order stays in effect until the position is closed or until the order is cancelled.

8. Trailing Stop

This is a type of stop loss order attached to a trade that moves as price fluctuates.

Your position will be closed when a market order to close your position at the best available price is sent.

Trailing stop orders give speculators the opportunity to let profits run while simultaneously limiting downside risk.

9. Good For the Day

A GFD order stays active in the market until the end of the trading day.

10. Once Cancels the Other

An OCO order is a mixture of two entry and or stop loss orders.

Allows a trader to place both a stop and limit order simultaneously, bracketing a position.

When one order is executed, the other is cancelled.

The reason for the cancellation is to prevent any accidental re-entry into the market once the position is closed.

OCO orders can also be used to bracket just outside both a technical support and resistance level, catching the market should it break to the upside or downside.

One (order) cancels the other. When one order is executed, the other is automatically cancelled.

11. One Triggers the Other

An OTO is the opposite of an OCO as it only puts an order when the parent order is triggered.

12. If Done Order

If-Done order is essentially a double-stacked order.

The “If” must be a limit or stop order.

Only once the initial limit/stop order is executed will the “done” become active.

The 2nd order must also be a limit or stop order.

13. If Done OCO Order

The same order type as a normal If-Done, only the 2nd order is an OCO order.

An If-Done OCO can be set to enter the market with a limit/stop at a specified price.

Once the transaction is executed, it will be automatically bracketed with both a “take profit” and a “stop loss” order.

14. Fill or None

This order allows a trader to set the parameter that his entire trade must be taken at a set price or none of it.

Fill or kill order is used by customers who wish to immediately execute the order, but at a specific price.

Broker – member of the exchange,will offer «bid» or «offer» three times and immediately return either executed or unexecuted order, as impossible to execute.

15. Stop Close Order

“Stop” price for SCO is triggered only when the market touches stop during closing of the trading session.

The disadvantage of this order – fast market in the last few minutes of trade may execute an order at undesired price.

It can, however, protect the client from the execution of the order due to adverse price fluctuations during the day.

16. Market If Touched Order (MIT)

MITs are the opposites of stop-orders.

MITs-buy order is placed below the current market price, and the MITs-sell order is placed above the current market price.

MITs-order is usually used to enter the market and start trading.

MITs-order is similar to a limit order in such a way that a certain price is placed in the order.

However, MITs-order becomes a market order once touched or passed on the price limit.

Execution can be either at this price, or higher or lower than the original quoted price.

MITs-order will not be executed if the market is not able to touch to price determined in MITs-order.

17. Good Until Cancelled Order (GTC)

GTC-order (or open order). Used in conjunction with a limit order or stop order.

GTC-order will remain valid and active until the customer cancels the GTC-order, or it becomes executed, or the contract expires.

If no order is defined as the GTC-order it is the order for the day, the validity of which will expire at the end of the current trading session if it is not executed before or if it is cancelled until the close of trading.

GTC-order cannot be cancelled automatically!

18. Market on Close (MOC)

This is an order that will be executed during the final seconds of trading at any price, which will be available at this moment.

19. Market on Opening (MOO)

This is an order where the customer wants it to be executed at the opening of trading at the best price available within the price range opened. Not all exchanges recognize this type of order.

20. Enter and Cancel Order

All orders, except for market orders can be cancelled and replaced by other orders if priority is not filled prior to cancellation.

21. Spread Order

The client is willing to take both long and short positions in an attempt to make profit, as the price differential or “spread” between the two prices.

The spread can be established between different months of the same product, between related products or between the same related products that are traded on two different exchanges.

Spread order is exercisable at the market in the best way and you can specify where you want it to be executed, or when the price difference between the products reaches a certain level (or higher premiums).