Types of trading orders
Generations of traders brought up with MetaTrader 4 are often convinced that there are only five orders: from the market and pending. However, this is a misconception: other markets and even just platforms provide advanced options for managing your trades. ForTrader.org magazine offers you a look at some of them.
Trade order "Market" or "from market"
Trade order "Market" allows you to buy or sell at the current market price in the fastest possible way. The price is not specified, but the implication is that the broker will execute the order at the best price available (under CFTC regulations, brokers are required to execute these orders at the best price available). However, when the bidding is rough, when the price is high volatility and low volumes, "Market" orders may be executed with slippage.
Trade order "Limit" or limit order
Trade pending orders "Limit" are used to enter or exit the market at a predetermined more favorable price. Limit" order on purchase is put below the current market price and can be executed only at the price specified in it or below it. Limit" order on sale is put above the current market price and can be executed only at the price specified in it or above it.
Stop order
Stop order turns into a "Market" order as soon as a certain price level is reached in the market. Stop orders are often used to close positions in order to limit losses or protect profitable positions. A "Stop" order is placed above the current market price to buy and below the market price to sell. If the market moves against open positions, "Stop" orders become "Market" orders, executed, i.e. closing open positions. For the MT terminal these orders are called TakeProfit and StopLoss.
We remind you that if you place the order "Stop" too close to the open position, then at the slightest undesirable movement of the market against, it can be knocked out of the market. If it is set too far away, you can lose considerable funds from one open position, if you have not guessed the direction of the transaction. The most effective use of stop orders, according to ForTrader.org, is achieved by thoroughly studying and analyzing the daily trading range, volatility, and volume of the instrument (currency pair) being traded, futures etc.), combined with risk management tactics and deposit size.
In some terminals, including MetaTrader (Buy Stop and Sell Stop), Stop" order can work as a pending orderwhich is used to open positions at a price below the buy market and above the sell market. However, not all platforms support this format.
Market if Touched (MIT) order - opening if touched
Market if Touched" (MIT) or "open on touch" order is essentially a "Limit" order, but works the same way as a pending "Stop" order. As soon as the price is reached, the order is executed at the nearest available price, turning into a "Market" order. Some exchanges do not accept "MIT" orders, so you should familiarize yourself with the trading rules beforehand.
Good Till Cancelled order - valid until cancelled
"Good Till Cancelled" (GTC) is typical of the derivatives market. The peculiarity of such an order is that it remains valid until the execution, cancellation, or expiration of the contract for which it is submitted. This order is also sometimes referred to as an "Open" order.
If an order is not marked as "Good Till Cancelled" (GTC) when placed, it will automatically become a "Day" order and will be cancelled (if not executed) at the end of the current trading session.
Stop Close Only" order - stop on closing
Stop Close Only (SCO) order - it is the order "Stop" which can be executed only at market closing and in that case if the price in the market has equalized or became higher than the price specified in the order "SCO".
Stop / Limit" order - stop with a limit
"Stop / Limit" order is set in order to control the price at which the "Stop" order is executed. This type of order uses two prices: the first price is specified for the "Stop" order and the second for the "Limit" order.
This type of order works as follows: when the market price reaches the "Stop" price, marked in the order, and becomes a "Market" order, then its execution will occur only if the price will not go beyond the "Limit" order. Stop/Limit order more often is used for opening positions, than for closing positions.
Market On Close (MOC)" order - a deal at market close
The order "Market On Close" is executed in the last minutes trading sessions at the current market price.
Market On Open (MOO) Order - Deal on market opening
Market On Close" order is performed in the first minutes of the trading session at the current market price.
One Cancels the Other (OCO) Order - one cancels the other
In an order "One Cancels the Other (OCO)" two orders are specified (linked), and if one of them is executed, the other should be automatically canceled.
Fill or Kill" order - execute or cancel
Fill or Kill order indicates to buy or sell at a certain price or immediately cancel that order if it cannot be executed immediately.
Other warrants
The technical capabilities of various online trading platforms can provide the ability to place orders such as:
- Bracket Order - Automatic placing of orders according to predefined parameters.
- Trailing Stop (Trailing Stop) - automatic change in the price of the order "Stop" on predetermined parameters.
- Previously issued but not yet executed orders may be: Cancelled - "Cancel.", or Substituted - "Cancel/Replace" - the placed order is replaced by a new order with changed parameters.