There are different kinds of orders the traders are able to place while playing in Forex. Below you will see the four main types of the orders.
- Market Order
This is the most simple and common type of the order. The trader purchases and sells the currency at the rate prevailing in Forex at the time of placing the order. Thanks to the gigantic size of the market and high volatility, the rate trends may reverse at any moment, so traders prefer to place orders at the market price in order to guard themselves against any adverse trend.
- Entry order
This type of the order will be filled only when specific conditions are met in the market, indicated in the order. There are two kinds of the entry order: a limit entry order or a stop entry order.
- Limit entry order
For instance, the current market price for currency pair is 0.6505-10. This means that you can transact at these levels. In this case, you can put a limit entry order to sell your funds at a price more than the market price, say, 0.6515. Your order would only be executed if that price is attained. Vice versa, you can place an order for purchasing at a level of, say 0.6500, and your “buy” order would remain pending till the price falls to that level.
- Stop entry order
This kind of order is usually used when you have reasons to believe that the currency is trading in a fixed range and think that it’s on the verge of a breakout from that range. You may want to purchase at a price higher than the market price or sell at a lower. For instance, you may go ahead and purchase at 0.6520 or sell at 0.6590, where you think that once these levels are attained, the currency will only go up or fall further. You exercise the stop entry order only when you have grounds to believe that the market will face sharp movements in the currency rates soon.
- Stop loss order
Because of the volatility, stop losses are very important – they define the maximum loss you can afford to suffer. In the example above, if your risk-taking ability is low, you may place a stop loss at 0.6505, and it will be the level at which the market will book losses for you, and you won’t be affected by any fall below 0.6505.
- Limit order
The trader announces a price at which he wants to buy or sell the foreign currency. For example, if a trader has purchased one currency against the other at the price of 0.6510, he can later place a sell order at 06525, so that he profited after execution of the order However, the order will be automatically cancelled if the target price isn’t achieved during the day.
Be Objective on Forex
Sometimes, it isn’t easy for Forex traders to understand that the currency market is highly unpredictable. The beginners spend a lot of time trying to learn the mechanism of the foreign exchange trade and forward their energy on trying to find a way to forecast movements. Therefore, they naturally believe that there are some common rules that govern the movement of the market. However, this is not true
Although Forex traders can choose between a lot of instruments at their disposal that would allow them to determine the right time to open or close a position, most of them rely only on one instrument In this case, after having opened a position, the traders watch their favorite indicator and usually base their trading decisions only on it, the others being ignored
This may work well enough until the chosen indicator starts telling the traders something different from what the other indicators are. Those traders who are caught in an open position with their favorite indicator telling them to hold, will do so, regardless of the fact that other indicators are recommending to close and get off the market. In most cases, they end up losing their money.
The main problem here, of course, is that the traders aren’t looking at the market as is, only through their own believes about it In addition, they use their favorite indicator to reinforce the ideas instead of considering the bigger picture. Further, encouraged by the fact that their favorite indicator is predicting the profit, the traders are focusing more on money than on the market movements
In case the Forex market wasn’t entirely unpredictable, it would have collapsed, because all market participants would profit all the time. However, there are a lot of instruments out there that can help you predict the direction of the market and such tools are usually doing a great job. However, even in the hands of the experts, the best instruments may occasionally fail to forecast the market’s movements accurately
This is in the nature of Forex – to lose in trade due to predicting the market wrongly, and you should accept it. In addition, you need to learn to avoid getting in a situation where you have few choices. That’s why you have to accept the fact that Forex can have a mind of its own and you have to follow its movements instead of trying to make the market go in the direction you want it to.
Learning to Profit from Trends
Understanding expense trends of the currency exchange market isn’t as easy as it might seem Businessmen often have wrong ideas and therefore build wrong plans based on them, which leads to losses. The information below will help you understand the Forex trends.
You have to predict the Forex expense trends. As a trader, you are supposed to observe a certain level and jump on to it believing that it’s stable. Nevertheless, that’s just based on assumption, which may not work in Forex business, because there’s never accurate prediction. If you want to win, you have to base your operations on the sure shot expense trends. And there are some factors to help you do so:
- Forex obeys scientific laws. Many experts believe that Forex trends are based on logic. This point of view is supported by Gann, Elliot and the followers of Fibonacci. Nevertheless, if everybody knew everything, prices would have never been a surprise, which means that the markets would be non-existent. The layman would agree with these ideas and fantastic suggestions, but facts say the opposite.
- Win the competition. Forex is the same as a sport, while any competition depends on chances. Although you may fail to determine chances, you will never lose. This rule applies not for every instance, but you can try it out on big probability situations to make sure you take the cake with very few losses and get huge proceeds in due course of time. In fact, voracity and panic fluctuate costs, which creates points visible on Forex schedules that can be used gainfully. Since it’s just a game, when prices fluctuate on your side, you should get to business: simply control your finances well and you’ll win.
- You can be imperfect, but you can’t be a loser. There are a lot of market participants who try guessing and get a non-existent undisclosed trend cipher. Although market expense trends may seem disordered, you should base your business on cost fluctuations to succeed Forex trading might be not an ideal business for everyone, but if done right, it may bring you a lot of money.
- Business can be made of news. This isn’t advisable, because news is in fact insignificant. They are only regarded as something that decides the movements. Let’s better see how trends occur.
- Actual expense trends can be defined as the following = basics + individual insight into them. As you know, people are not always rational. They often behave emotionally, which is why logical reasoning isn’t always true. Although the real human psychology is consistent, the following matters have no logic:
- People make costs move to extreme and these passing points can be used to profit.
- Carry on with business and do not get into guessing.