* Market or instant orders.
* Postponed or deferred orders
1.Market orders.A market order is an order to buy or sell a currency at the CURRENT market price.
2.Postponed orders.
A postponed order is an order to buy or sell a currency at some price DIFFERENT from current (such an order is automatically executed by broker when the price hits that level).
This is very convenient for those who is not intended to sit behind the screen 24 hours a day to trade with a market orders.4 types of postponed orders:
2 types of Limit Orders
In a limit order, the trader not only specifies the currency he wants to buy or selland the number of contracts, but also at which price he wants to do so; in other words, a limit is an order to buy or sell at a specified price that is better then the current price.
2 types of Stop Orders
The stop order is an order that is activated when a currency reaches a specified price called "stop". This order becomes a normal market order when the quoted prices reaches a specified level. Stop orders can be used to enter the market on momentum (like when a resistance or support level isbroken), to limit the potential loss after establishing a position, and to protect the profit of an existing position that has moved favorably in price. In forex trading, stop orders are very important.
*Buy Limit
* this order buys you a currency at the price that is lower (i.e. better) then current one.
* it is commonly used in the uptrend or bullish trend, when the market rolls back on CORRECTION, followed by another rally.
* How to calculate a bottom turning point of correction — look in theannotation for professional traders at the bottom of this lesson.
*Buy Stop
* this order buys you a currency at the price that is higher then the current price.
* it is used:
- at very volatile market when currency rate swings fast up and down, and broker requotes your buy market orders again and again at bullish trend;
- as a stop-trade (your «air-cushion» at the market's force majéur situation) or lock entry when you trade short.
Note: How to place a postponed Buy Stop and Sell Stop in the correct positions, please look in the annotation for professional traders at the bottom of this lesson.
*Sell Limit
* this is an opposite order to Buy Limit
* this order sells you a currency at the price that is higher (i.e. better)then current one.
* it is to be placed in the downtrend or bearish trend, when the market goes upon CORRECTION followed by next downfall.
*Sell Stop
* this is an opposite order to Buy Stop
* it is used:
- at very volatile market when currency rate swings fast up and down, and abroker requotes your sell market orders again and again at bearish trend;
- as a stop-trade (your «air-cushion» at the market's force majéur situation) or lock entry when you trade long.
2 types of postponed orders to close a trade:
*Take Profit
a) this is a stop order to close your open trade
b) it is used in the situation:
* when a trend's resistance or support level is broken
* and you define as a goal the next resistance or support level of present trend (and place Take profit order to fix more profit assuming that the price will reach that next level while you're away)
* Note: Resistance and support levels, goal calculations in the Masterforex-V trading system — look in the annotation for professional traders at the bottom of this lesson.
*Stop Loss
* an «air cushion» - stop order to close your trade in loss when your expectations from trend did not confirm
* protect your deposit from unexpected bigger losses
* in the Masterforex-V trading system lock is usually used instead of Stop Loss
Basic Rules for trader (keep in mind how your bank's exchange office works)
* buy order executes at Ask price
* sell order executes at Bid price.
* closing of your orders equals to reverse
* placing of Take Profit and Stop Loss orders let trader to transfer a part ofthe job to broker and not to sit next to terminal all the time.
Credit : http://forum.masterforex-v.com/index.php?showtopic=14636
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