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Margin Order Types

The basic landscape in FX trading involves a number of order types that facilitate efficient transactions. Below, we have defined several of the most common terms.

1. Limit

A limit order is commonly used to enter or exit markets at a specified price or better than the market price. In addition, a limit order allows the trader to manage the length of time that the order is current or outstanding before it is cancelled.

2. Stop if Bid

A Stop if Bid order is used to buy or sell a currency is the Bid price breaches the specific level in the price field. Typically, Stop if Bid orders are used to buy a forex position in order to make sure a certain level is broken.

3. Stop if Offer

A Stop if Offer order is used to buy or sell a currency is the Ask price breaches the specific level in the price field. Typically, Stop if Offer orders are used to sell a forex position in order to make sure a certain level is broken.

4. One Cancels Other (OCO)

This most common linked order, OCO, stipulates that if one part of the order is executed, then the other part is automatically cancelled. In forex trading, OCO often refers to a buy order and sell order linked together so that when one of the orders is executed, the other is cancelled. Consider the OCO as follows: the trader protects an existing position from loss (stop order) and ensures that profits are taken (limit order).

5. If Done (ID)

These contingent trade orders, also known as slave orders become active only if the primary order is executed first. An example would be a working order to buy EUR/USD at 1.2500 and a contingent order to sell at 1.2400 Stop if Bid -- if the first order is done.

External links

ForexInterBank's Complete Forex Course

ForexInterBank's Advanced Strategies Course

Labels: forex