Getting Started in Currency Trading, + Companion Website: Winning in Today's Market, 4th Edition

Chapter 10

Making the Trade

Introduction

YOU ARE HERE—With the completion of this chapter, you will be ready to open a few demo accounts and see for yourself why the FOREX markets are so exciting and popular.

This chapter shows you the various kinds of orders used to place trades in the FOREX markets—and how to exit them.

Tip: YouTube—www.youtube.com—has many MetaTrader 4 tutorials on placing orders on this popular trading platform. But practice on your demo account is the key to mastery of order placement.

Orders

An order is an instruction with defined parameters to your broker to take a specific action in the market, either now or in the future. An order is for immediate execution or pending execution. Pending means prices must behave in some specific way before the order is ready for immediate execution. A market order is for immediate execution, at the best bid or ask the broker can offer to you as a function of the broker’s data feed and liquidity providers.

The number and types of currency trading orders that can be used with broker-dealers have expanded substantially in the past few years. Customer demand for more flexibility and trade execution options and competition have been the main driving forces. Broker-dealers, especially market makers, are happy to oblige, since a large palette of orders helps them manage their book.

Orders can be further broken down into three primary categories of functionality—1) market (immediate execution), 2) limit (pending execution), and ...