Types of Orders

In our last video, we discussed how we measure a change in the value of an FX pair the pip and the pip’s monetary value. In this one, we will be discussing the types of orders that are available to a trader.

But let’s make a start with the question what is an order?

An order is practically the initiation or the termination of a trading position in the trading platform (MT4) for any given trading instrument. It’s the order to start or to stop trading practically for any given position. You could start buying or selling a trading instrument that would be the initiation of a position, while its termination would be the closing of an existing position that you have opened previously. Orders are distinguished into two categories, irrespective of their direction and whether you are opening a position or closing it, but they depend on the timeframe of their activation.

Hence, the first category would be market orders. Market orders are orders to initiate or terminate a position instantly. It’s a direct order to start trading in the market, hence the name “market order”. Their main characteristic is that you enter or close a position immediately, in other words, you simply trade an instrument at the current market price with just a push of a button.

The second category of orders would be pending orders. In this case the order is not immediate, but a certain condition has to be met for the order to be activated. For example, a pending order could be set for the trading platform to start buying EUR/USD, once the particular instrument reaches a certain price. Pending orders could also be used to close existing, open positions.

Yet those subcategories are to be the subject of our next video.