In the Forex market, some level of automation is required. This is because the market is open 24 hours a day, seven days a week. As a result, the value of an investor’s possessions, and thus their net worth, fluctuate 24 hours a day, seven days a week. As a result, if an open position is not managed for a few days, the monetary worth of the position may alter dramatically. Also, unless you are a large global organization with the ability to pay personnel to work around the clock, it is impossible to manually monitor positions 24 hours a day, seven days a week.
As a result, market orders come in helpful in this situation. These are tools used by investors and traders in the Forex market to manage their open positions passively. These technologies allow investors to keep the value of their trades within specific limits even if the market is moving 24 hours a day, seven days a week. There are various types of orders in Forex:-
Types of Order
Market Order
The most prevalent sort of order in the Forex market is market orders. Simply put, it’s a purchase order placed at the current market price. As a result, if you’ve ever made an online purchase, the “Buy Now” button mimics the functioning of a market order in the Forex market.
As a result, when a market order is made, it may be argued that it is executed in real time. This order automatically searches the market for the best available price and places your order at that price.
Because the Forex market’s values change so quickly, it’s possible that your market order will be executed at a slightly different price than you expected! In market jargon, this is referred to as “slippage.” Slippage can work to an investor’s advantage at times, but it can also work against him at other times.
A market order immediately becomes an open position. As a result, any profits or losses on this order must be realised when the position is closed.
Pending Order
A pending order is a request to execute a purchase or sell deal, also known as a market order, only if specific criteria are met. As a result, it can be considered a conditional market order. As a result, pending orders are not executed and are not included in margin calculations until they are actually executed. Pending orders remove the need to constantly monitor the market in order to execute a deal. Rather, it allows traders to create automatic orders that will execute transactions in real time if certain circumstances are met. Pending orders, for example, eliminate the requirement for manual involvement in trading.
Profit booking order
Profit booking orders are typically used to close off a lengthy open position by selling. The conditions that must be met before the square off can take place are specified in these orders. A profit booking order, for example, is an order to execute a trade if the profit reaches 10% or the price rises by 12%. These orders allow traders to lock in profits in a market where prices fluctuate quickly and putting orders manually can take a long time.
Stop Loss Order
A profit booking order is the inverse of a stop loss order. It is, however, far more extensively employed in the markets than the profit booking order. The order establishes a lower limit that the investor is willing to accept. If the price falls below this level, the investors sell their assets in order to minimise their losses.
As a result, a stop loss order is used to close down a long open position when prices fall. This command, once again, responds promptly and prevents losses by acting far more quickly than hand intervention could.
Trailing Stop Order
A trailing stop order is similar to a stop loss order in that it follows the movement of the market. This means that when the price hits a certain floor, this order also sells off an open position. In this case, however, the floor moves upwards if there is a profit. Assume you place a trailing stop order at a 10% discount to the market price. The value of your holding grew by 15% the next day.
The price floor would remain the same in the case of a stop-loss order, i.e. 10% below the price where you started the transaction. A trailing stop order, on the other hand, follows the market price. The price floor in this situation would be 10% below the new market price, i.e. after the price has reached a new high.
Dependent Orders
Investors can also create dependent orders on the Forex market. This means that an investor can make two orders at the same time, but only one of them will be completed depending on market conditions. Alternatively, placing one order may trigger the placement of another order at a later time. Complex algorithms that execute trades with minimum human intervention can be designed using dependent orders.
Artificial intelligence (AI) is increasingly being used in the Forex market to execute deals. Many people believe that this is the only method to trade a market as unpredictable as the Forex market, which operates 24 hours a day, seven days a week.
There are several types of order in the forex market and each of them has its importance But if you are planing to trade in the forex market you have to learn about these orders in details. For learning about types of order in the forex market you can enroll in Capital Varsity Forex Trading Course to know what exactly is these orders. After completion of this Forex training course you will able to understand types of forex order better.