Australian Forex Brokers and Order Placement

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Australian Forex Brokers Order Placement

This article looks at the different orders that can be placed when working with Australian forex brokers.

In order to trade on the foreign exchange market, you must understand the process of trade execution.  One of the most important aspects is order placement.  If you fail to place an order correctly it will affect your trading and the chances are likely that you will experience detrimental losses.

The different Australian forex brokers orders

Order placement can take place through Australian forex brokers or online trading platform (which is supplied via a forex broker).  There are various different types of orders, with the two main types being the stop order and the market order.  It is important to have insight into the difference between these orders, what they do and how one can place them.

The market order

The market order is the most frequently used type of order.  This order is used to execute immediate orders at the current market price, which is the ask or bid price as it is displayed on your trading screen.  One will use market orders when either entering a new trade or exiting an existing trade.

The stop order

The stop order will become a market order once a certain predetermined price level has been reached.  This type of order is also used to either enter a new trade or exit an existing one.  The buy-stop order is when you buy a pair at the currency market price when the price has reached the previously specified price or more.  Whereas, the sell-stop order is seen when you sell your pair at the current market price when the trade price reaches the predetermined amount or lower.

The stop order is a well-known order to use when trading breakouts.  However, you can also utilise entry stops if you are trading a breakout downside.  This involves placing a stop-sell order numerous pips underneath the support level.  If the price reaches the specified price, or goes below it, then your position will be opened short.

It is important to know where to place your exit point before you enter a trade as a precaution should the market against you.  These potential losses can be reduced by setting a stop loss order.  For example, if you are trading a long position on a EUR/USD pair, you will hope for a rise in the currency value.  In order to avoid any losses, you should place a stop-sell order at a predetermined price.  This will ensure the position automatically closes should that price be met.  If the position was a short, then you should set a stop-buy order.

It is possible for you to move the stop-loss order in the direction of a profit in order to protect some of the earnings you have incurred during your open trade.  If the trade is a long position, then you should change the stop-sell order from a loss position to the profit zone.  This will protect your trade from any potential losses if the trade does not reach the set profit amount or if the market swings against you.

 

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