Depending on your objectives, your trading system and the way you expect prices to go, you can place different kinds of orders with your broker. These are the most common types of orders that you can instruct your broker to make on your behalf:
Market Orders
A market order is a simple kind of order and the one most commonly used in day trading. A market order is an order to sell or buy a currency at its current market price. A trader will specify the currency pair he wants to trade and the number of lots to trade. This is a market order.
Most online brokers can do this in a few seconds with one click of the mouse. The order is made straight away at the given price.
Limit Orders
This is when an order is placed to sell or buy a currency when it gets to a certain price. For example, let's say that USD/JPY is trading at 117.25. This price has been in a downtrend and your analysis tells you that it is going to drop to 116.25 then go back up.
You can either wait around for this to happen and then buy currency, or you can place a limit order at 116.25 and the price reaches that figure the order will be executed immediately.
If your analysis is incorrect and the price does not drop so much, your trade will be canceled rather than executed.
Stop-Loss Orders.
Stop-loss orders are commonly used by smart traders to minimize losses. Let's say you expect the price of GBP/USD to rise and you place a buy order at 1.8255 with a stop-loss order at 1.8235. Your analysis might be incorrect and let's say the price drops right down to 1.8185. Using the stop-loss order gives you protection by selling automatically at 1.8235. You will lose only 30 pips instead of 70.
OCO
OCO is an acronym for "one order cancels the other order". This is when you place 2 orders with prices below and above the current market price. When one trade is triggered, this cancels the other one.
Let's say, for example, the price of USD/CHF has been around the 1.2435 mark for a while. You know it will move soon but you don't know if it will go up or down. You could place an OCO to either buy at 1.2445 or sell at 1.2455. This means that as soon as the breakout begins, you can start trading. When the first trade is activated, the second one is cancelled out.
A better way to control this process however is by using your own robot which you program with a series of commands and which then manages the trades for you, visit our site for a full review of the many forex robots available for automate forex trades
The author is an avid Forex enthusiast. To get started with Forex investing, you'll need to open a trading account with a broker/trading platform. See a list of recommended forex accounts at how to automate forex trades Forex Trading Accounts and Platforms
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