9 Forex Trading common commands - Use them to protect profits and avoid loss
Saturday, 16 August 2008
When negotiating change, there are several types of orders that the retailer can place on the market to protect themselves against adverse market conditions and capitalize on opportunities that the market often provide. We'll start with the basic commands that should be available in any trading platform. For beginners, you must respect the simple types, until you feel comfortable with your trading platform. Never force you to take any trade for the benefit of playing with the types of orders.
It can be said that all orders on the market returned to buy or sell orders. Remember that negotiation currency pairs that you sell a currency at the same time and buying another. Here are some common types of orders:
(1) purchase order - Place this command when you expect the market will increase. Often, you must provide certain parameters of your purchase order. For example, do you want to buy the currency pair at the price it is currently negotiating, or do you have a particular price in mind? What if your order can not be filled at the price you specify, that price is comfortable for you? This is called slippage. For example, the EUR / USD trades at 2.0190 and you plan to spend more, you can place a purchase order to buy at 2.0190. However, there is no guarantee that you will get in at this price, many brokers will require that you specify a skid. Continuing our example, suppose you're comfortable buying at the lowest level or higher to 2.0185 to 2.0195, then you specify a shift of 5 pips. It is for your protection. Suppose that just before your order becomes active, is an event which is GBP / USD drop down to 50 pips, are you still willing to buy? -- Maybe the trend has changed down, your answer May be not. In addition, you must specify the time range when the order is active. Your purchase price of entry should be dictated by your negotiating strategy or system.
(2) sell order - Place this command when you expect the market fall. Sell to have the same kinds of parameters, we discussed under purchase order.
(3) market order - Want to get the market or not the current market price. The execution is generally guaranteed, but the price is not the case. A market order ensures that you get from or to the market.
(4) limit order - An instruction to execute an order if a market is moving at a more favourable (ie an instruction to buy if the market drops to a level determined or sell if a market goes up to a specified level. Execution is usually not guaranteed. Your broker use their "best efforts" to get your order filled. This command can be used to enter or exit a position.
(5) Stop Order - An instruction to execute an order if a market is moving at a level less favourable (ie an instruction to buy if the market drops to a predetermined level, or sell if a market goes up to a specified level. A stop order is often placed to put a limit on the risk of loss on an existing position, which is why stop orders are sometimes called Stop-loss orders. Never trade without a stop loss . A trade you think has all the right ingredients for success May turn into a loss of fat before your eyes. Always protect yourself so you can be alive to trade another day.
(6) Trailing Stop Order - A trailing stop order is similar to a stop. The only difference is that you are already in the account and you want to protect your profit. Trailing stop order, then you can set your stop order to continue to monitor price trends in real time by specifying the distance pips you want your judgement to move. For example, you have a long USD / JPY position, which you bought at 111.50 and you set a stop order to sell USD / JPY at 111.10, when USD / JPY starts to fall. This command stopping close to your position with a 40 pip loss if USD / JPY drops to 111.10. However, suppose USD / JPY rose to 111.90. You can move your stop order to sell 111.70 to whom the chance to a profit of 20 pips for you if USD / JPY to end its movements up.
(7) Order up Cancelled (GTC) - As we mentioned earlier, when you place an order, you must specify for how long the order would be valid. The CG Commander is a very common type of order, it remains valid, 24 hours a day, until you cancel it, or it is executed. It is the responsibility of traders, not dealers, remember, it is a command.
(8) commands Day - Day orders are good until 23:00 CET time.
(9) Order Cancels Order (OCO) - also known as cancels others. After entering the market, a limit order to protect profits, and a stop to limit losses can be placed. When the limit is the judgement or order is executed, he will cancel others in order automatically. For example, you sold EUR / USD at 1.2290, looking for a short-term move to 1.2260. However, if you decide that EUR / USD moves above 1.2310 you want to cut your loss, so you put a limit order to buy EUR / USD at 1.2260 and a stop order to buy EUR / USD 1.2310 on a OCO. This order to close your position with a 30-pip profit if limit order is reached or the first with a 20-pip if the stop loss order is reached first. Once an order is executed, the second order is automatically cancelled.
There are other types of orders available to traders. However, keeping your way is perhaps one of the best secrets to success in Forex Trading. Making money is what matters, not the complex structure of your order. A basic rule is that if you do not understand what order you go really does not place it. It can really hurt you badly.
Labels: forex
posted by Master @ 02:59, ,