Forex education: order types

Order Types

Basic Order Types

There are some basic order types that all brokers provide and some others that sound weird. The basic ones are:

• Market order
  A market order is an order to buy or sell at the current market price. For example, EUR/USD is currently trading at 1.2140. If you wanted to buy at this exact price, you would click buy and your trading platform would instantly execute a buy order at that exact price. If you ever shop on Amazon.com, it’s (kinda) like using their 1-Click ordering. You like the current price, you click once and it’s yours! The only difference is you are buying or selling one currency against another currency instead of buying Britney Spears CDs.
• Limit order
  A limit order is an order placed to buy or sell at a certain price. The order essentially contains two variables, price and duration. For example, EUR/USD is currently trading at 1.2050. You want to go long if the price reaches 1.2070. You can either sit in front of your monitor and wait for it to hit 1.2070 (at which point you would click a buy market order), or you can set a buy limit order at 1.2070 (then you could walk away from your computer to attend your ballroom dancing class). If the price goes up to 1.2070, your trading platform will automatically execute a buy order at that exact price. You specify the price at which you wish to buy/sell a certain currency pair and also specify how long you want the order to remain active (GTC or GFD).
• Stop-loss order
  A stop-loss order is a limit order linked to an open trade for the purpose of preventing additional losses if price goes against you. A stop-loss order remains in effect until the position is liquidated or you cancel the stop-loss order. For example, you went long (buy) EUR/USD at 1.2230. To limit your maximum loss, you set a stop-loss order at 1.2200. This means if you were dead wrong and EUR/USD drops to 1.2200 instead of moving up, your trading platform would automatically execute a sell order at 1.2200 and close out your position for a 30 pip loss (eww!). Stop-losses are extremely useful if you don’t want to sit in front of your monitor all day worried that you will lose all your money. You can simply set a stop-loss order on any open positions so you won’t miss your basket weaving class.

• GTC (Good ‘til canceled)
  A GTC order remains active in the market until you decide to cancel it. Your broker will not cancel the order at any time. Therefore it’s your responsibility to remember that you have the order scheduled.
• GFD (Good for the day)
  A GFD order remains active in the market until the end of the trading day. Because foreign exchange is a 24-hour market, this usually means 5pm EST since that that’s U.S. markets close, but I’d recommend you double check with your broker.
• OCO (Order cancels other)
  An OCO order is a mixture of two limit and/or stop-loss orders. Two orders with price and duration variables are placed above and below the current price. When one of the orders is executed the other order is canceled. Example: The price of EUR/USD is 1.2040. You want to either buy at 1.2095 over the resistance level in anticipation of a breakout or initiate a selling position if the price falls below 1.1985. The understanding is that if 1.2095 is reached, you will buy order will be triggered and the 1.1985 sell order will be automatically canceled.

Always check with your broker for specific order information and to see if any rollover fees will be applied if a position is held longer than one day. Keeping your ordering rules simple is the best strategy.

AiMS News update

AiMS News: Forex, CFD, Stocks and ETF Trader Courses, Training and Education London

Comment from the bottom Rob Lee Senior Analyst at AiMS reports on the companies trading performance and the forex training school in London.

February has begun particularly well for our forex trading operations, amassing no less then 30% ROC (return on capital) in just a few days. The decent in Euro and equities was forecast and recognised way back in September last year with targeted turning areas executed effectively. We have capitalised on AUD, NZD, GBP and EUR descents with extensive use of our hedging matrix system giving a protective positional operation which has proved very successful.

Naturally our stock positions are reduced and CFD trading limited to sell side broadly speaking, we have not entered any new bond positions to date. The outlook for the near term is reduced to Intra-day and scalping trading as key areas are reached and volatility is aggressively targeted.

The forex Training course’s in London continue to be overly successful and we are experiencing demand far greater then supply, some clever scheduling by our unsung hero Marit (Admin & Accountants) has streamlined efficiency and put us back on track to fulfill student demands. Waiting has been reduced greatly and potential clients should experience no noticeable delay in booking and receiving their desired courses.

The private trading club membership continues to grow, and as Alister commented last week in a meeting “we are going to need a bigger boat”, a true statement and sourcing of added space has been a focus. Although not at maximum capacity we are planning ahead of the curve.

Private Trading Club e-library – London

Good news for our club members, as from today you can now browse our extensive e-library, for your password  please contact Rob, Ali or our Administration team at admin@aimchool.co.uk

The free e-library which now boasts 63 titles  includes classical, theory and practical works from many authors covering subjects from forex day trading to strategical stock trading and everything in between.

Welcome new club members

We would like to welcome M of Palmer’s Green London, an knowledgeable trader with experience. Hello mate, welcome aboard

B of London, B is an ex-student of Rob Lee’s and joins us to gain more experience, welcome back B we missed you.

Ali is not ill I repeat Ali is not ill… anymore

Alister has recovered from his mumps well although he has lost weight in the process. Poor Ali, our specialist Forex training advisor London, managed to get the worse type of Mumps you can. Fair play to the guy, although ill, swollen and barley able to move or talk still managed to continue his work. Nice one dude, good to see you back to full strength.

Mike Young CFA Dubai bound

Mike Young CFA, Chartered Financial analyst, good friends with AiM School and manager of the trading help desk has flown of to Dubai for a few month to assist in a new start by program. He texted me a few days ago and all is fine. Eyasu and AiMS will be care taking the trading help desk until his return.