Forex Trading course for Beginners
    About Lesson

    Types of Forex Orders

    There are some basic order types that all brokers provide and some others that sound weird.
    Orders fall into two buckets:
    1)Instant marker execution/ Market order: an order instantly executed against a price that your broker has provided.
    2)Pending order: an order to be executed at a later time at the price you specify.

    Pending Orders

    Pending Orders – Limit Order/ Stop Orders
    Limit Order – A limit order is an order placed to either buy below the market or sell above the market at a certain price. This is an order to buy or sell once the market reaches the “limit price”.
    • You place a “Buy Limit” order to buy at or below a specified price.
    • You place a “Sell Limit” order to sell at a specified price or better.
    Once the market reaches the “limit price” the order is triggered and executed at the “limit price” (or better).

    Pending Orders – Limit Order/ Stop Orders
    Stop Order – A stop order “stops” an order from executing until the price reaches a stop price. You would use a stop order when you want to buy only after the price rises to the stop price or sell only after the price falls to the stop price. A stop entry order is an order placed to buy above the market or sell below the market at a certain price.
    • You place a “Buy Stop” order to buy at a price above the market price, and it is triggered when the market price touches or goes through the Buy Stop price.
    • You place a “Sell Stop” order to sell when a specified price is reached.

    Different ways to trade Forex

    Because forex is so easy to learn, traders came up with a number of different ways to invest or speculate in currencies.
    Among the financial instruments, the most popular ones are retail forex, spot FX, currency futures, currency options, currency exchange-traded funds (or ETFs), forex CFDs, and forex spread betting.

    The most common and most available way to trade Forex is CFD,
    A contract for difference (“CFD”) is a financial derivative. Derivative products track the market price of an underlying asset so that traders can speculate on whether the price will rise or fall. The price of a CFD is “derived” from the underlying asset’s price. A CFD is a contract, typically between a CFD provider and a trader, where one party agrees to pay the other the difference in the value of a security, between the opening and closing of the trade. In other words, a CFD is basically a bet on a particular asset going up or down in value, with the CFD provider and you agree that whoever wins the bet will pay the other the difference between the asset’s price when you enter the trade and its price when you exit the trade. A forex CFD is an agreement (“contract”) to exchange the difference in the price of a currency pair from when you open your position versus when you close it.

    How to Make Money Trading Forex

    Placing a trade in the foreign exchange market is simple. The mechanics of a trade are very similar to those found in other financial markets (like the stock market), so if you have any experience in trading, you should be able to pick it up pretty quickly.
    When buying, the exchange rate tells you how much you have to pay in units of the quote currency to buy ONE unit of the base currency.
    First, you should determine whether you want to buy or sell. If you want to buy (which actually means buy the base currency and sell the quote currency), you want the base currency to rise in value and then you would sell it back at a higher price. When traders talk, this is called “going long” or taking a “long position.”
    Just remember: long = buy.
    If you want to sell (which actually means sell the base currency and buy the quote currency), you want the base currency to fall in value and then you would buy it back at a lower price. This is called “going short” or taking a “short”.

    All forex quotes are quoted with two prices: the bid and ask. In general, the bid is lower than the ask price.

    Bid – The bid is the price at which your broker is willing to buy the base currency in exchange for the quote currency. This means the bid is the best available price at which you (the trader) can sell to the market. If you want to sell something, the broker will buy it from you at the bid price.
    Ask – The ask is the price at which your broker will sell the base currency in exchange for the quote currency. This means the ask price is the best available price at which you can buy from the market. Another word for ask is the offer price. If you want to buy something, the broker will sell (or offer) it to you at the ask price.

    Spread – The difference between the bid and the ask price is known as the SPREAD.
    Example – On the EUR/USD, the bid price is 1.34568 and the ask price is 1.34588…
    • If you want to sell EUR, you click “Sell” and you will sell euros at 1.34568.
    • If you want to buy EUR, you click “Buy” and you will buy euros at 1.34588.

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