Four Main Types of Orders in the FOREX Market

There are many types of orders for traders to make transactions in the FOREX Market for making profits. Four main types are the most used, and many traders have found tremendous success with Market, Limit, Stop Loss, and Entry Orders.

Market Order

The most simple and most common type of order in the FOREX Market is the Market Order. Here, the trader buys and sells the currency at the rate prevailing in the market at the time of the transaction. Due to the huge size of the market and the high volatility, trends can reverse at any second. This is why traders prefer placing orders at the market price to guard them against any adverse trend.

Limit Order

With the Limit Order the trader specifies a price at which he may wish to buy or sell the currency. Suppose a trader has bought GBP against the USD at 1.9710, and then he can place a sell order at 1.9725. When the exchange executes the order, the trader will profit from it. The order will be cancelled if the target price is not achieved during the day.

Stop Loss Order

Due to market volatility, stop losses are essential. They determine the maximum loss a trader is willing to suffer. Suppose, in the above instance, the risk-taking ability of the trader is low. The trader may place a stop loss at 1.9705. At this level the exchange will book losses for him or her, and he or she won’t be affected if the price falls below 1.9705.

Entry Order

An Entry Order is filled only when certain conditions are met in the market, which the order specifies. There are two types of Entry Orders: Limit Entry and Stop Entry.

Here is an example of a Limit Entry Order. Let’s assume that the current market price for GBP/USD is 1.9705:10. This implies that the trader can transact at these levels. Here, a trader can place a limit entry order to sell his or her holdings at a price more than the market price, say, 1.9715. His or her order would be executed only if that price is attained. Similarly, he or she can place an order for buying at a level of, say 1.9700, and his or her ‘buy’ order would remain pending till the price falls to that level.

A Stop Entry Order is generally used when the trader has sufficient grounds to believe that the currency is trading in a fixed range and believes that it is on the verge of a breakout from that range. He or she might want to buy at a price higher than the market price or sell at a lower price than the market price. In the same example, the trader may go ahead and buy at 1.9720 or sell at 1.9690, where he believes that once these levels are attained, the currency will only go up or fall further, as the case may be. A trader exercises the stop entry order only when a trader has reasonable grounds to believe that there will be sharp movements in the currency rates in the Forex market.

So there you have the main types of orders in FOREX trading. Due to the risks in this market you should use caution and be guided by these types of orders.

Search Amazon.com for FOREX Market

Importance of FOREX Trading

Foreign Exchange (FOREX) involves exchanging different foreign currencies for profit. The reason for buying the currency of another country may be the need to buy some commodity of the said country as well, in addition to making money through the difference in exchange rates.


In the latter case, people buy the currency of a foreign country when the rate in that market is low, and sell it when the rates go up. Currency trading is usually done between the central banks, the government, the speculators, and the MNCs. Nations cannot trade with each other without the presence of a foreign market.

A huge amount of money is traded daily in the FOREX market, although the amount invested by an individual trader may be very low. No one individual can have any influence on the FOREX fluctuations, not even the government. Therefore, it can easily be concluded that the level of the currency reflects the strength or the weakness of the foreign country’s economy. This makes the FOREX market a good place for competition.

The government and the central bank do try to stabilize the currency of their country by speculating and by buying and selling currencies at appropriate times. This way they can influence the market if they conduct a trade in huge volumes. Buying its own currency, however, the government or the central bank must have huge reserves of foreign currency with them, so it is virtually impossible to inflate the currency value artificially.

Banks trade a lot in foreign currencies and this forms a large chunk of the volume in the FOREX market. They buy currencies not only as individual bodies, but also on behalf of their clients. They trade in heavily in futures. Until a few years back, the brokers could influence the volumes of trading in the FOREX market, but due to the electronic services available now, the services of brokers is not required. It is easy to operate electronically.

Trading with international countries is possible only with the existence of FOREX markets. When there is no FOREX market, there is no common currency between two countries, which means no one can evaluate the value of one currency with respect to the other.

The buyer pays the seller in the former’s currency. When the money is received, the seller buys goods in the buyer’s country and sells those goods in his (seller’s) country.

Only then he is able to know how much he has earned through the export. In the presence of a FOREX market, though, it is very easy for a seller to know of his earnings at the time he conducts an export trade. In the same manner, the buyer too will have a thorough knowledge of the cost he will have to incur to buy goods from an international country.

What is FOREX Trading?

Forex trading involves dealing in international currencies. It involves selling currency of one country to buy that of another. This process involves Foreign Exchange (FOREX) at the most appropriate time to profit from the transaction. One trading in FOREX must have the ability to forecast plays in such trading. Many are concerned with how FOREX trading can be such a lucrative earning opportunity since fluctuations in exchange occur so little of the time.


It is important to note, however, when doing something in big volumes, a minor change can add up to a lot. There are also many non-monetary advantages to it as well. For example, anyone who wants to deal in FOREX can do so because only a basic knowledge of it is required.

FOREX can have lucrative financial rewards, but with anything there are certain conditions to follow before trading in FOREX. First, one must have a thorough knowledge about the trends in the stock market, the basics of trading, and risk-taking ability. It is easy to get the help you need for attaining these conditions.

Many sites are available on the internet that can help you clarify the basics and help you brave the rough weather. A good reason why FOREX trading can be lucrative is the fact that there are frequent fluctuations in currencies, though the percentages may be small.

You gain if the fluctuation favors you, and the reverse holds true as well. No one can accurately predict currency trends. In addition, liquidity is also a reason why FOREX trading is so popular.

Most important – in FOREX, you can make huge sums of money even if your initial investment is low. You can invest as little as $50,000, sometimes lower. On the other hand, the more wealthy population may have no upper cap in the amount they invest. So remember that even with a nominal investment, the earning ability can undoubtedly be substantial.

Today, almost all major businesses are connected to the internet, and FOREX trading is no exception. You can deal in foreign currencies right from home; in fact, trading FOREX is entirely conducted online. Therefore, you have the liberty to choose when you want to trade, where you want to trade, and you don’t need to meet any deadlines.

Basically, you can be your own boss as the process of online trading is fairly simple for anyone to understand. Just open a FOREX trading account with a recognized broker, and they can complete the rest. All you need to do is get investment together. It’s that simple.

So, therefore, it’s clear that FOREX trading can be one of the best businesses to make money. Although there is some risk attached to it, but it can be avoided with care and an alert mind!