Forex Order Types – Mechanics of Online Forex Trading

Forex is considered to be the leading global marketplace with transactions of more than 5 trillion dollars taking place everyday. Forex values keep on changing because of factors like world economy and political events that takes place in different countries. Though forex trading is not easy and has lots of intricacies, a person trading a particular country’s currency, has to study and observe the present scenario and future prospects of that country’s currency.

Investors use order types to trade forex. These orders instruct the broker to buy (or sell) at the best price that is currently available. Here is a clear explanation of order types used in online trading.

A market order type is basically an order which is carried out to sell and buy at the current market price. Those customers, who are using AC Markets’ online currency trading platform, can click on the selling and buying button after completion of a specific deal size. The execution of the order is instantaneous, which means that the customer gets the same price as seen at that point of time.

The process of Forex trading involves certain steps that include:

  • A customer specification to the dealer about the deal size and currency pair
  • The dealer basically gives a two-way price, one is the Ask for price and the other is by bidding
  • The customer may ask for re-quote 
  • The dealer then confirms the trade. Usually under normal market circumstances dealers respond to market orders within five to ten seconds.

Limit order is also an order which is basically placed to buy and sell at a certain price. This order contains two components, namely duration and price, where the trader specifies the price at which he wants to sell or buy a certain currency price. 

Stop orders are also placed in order to buy and sell at a specified amount or price containing same two variables, duration and price. This order is basically used for a limit loss potential on a transaction. An OCO which is an acronym for ‘Order cancels Other’ stands for an order which is a mixture of two limit or stop orders. Two orders having price and duration variables are also placed below and above the current price.