Order types

Order types

The term “Order” refers to how you will enter or exit a trade. There are many different types of orders that can be placed in the market via the trading platform. You can choose to execute a trade at the current market price. Alternatively, you can create a conditional order to execute a trade at a future market price, above or below the current market rate. Read about the order types available on the Metatrader 4.

Market Orders

This is practically the most common order type used by traders. A market order is an order to buy or sell a financial asset at the current price. When executed, it results into an open position in the market. AvaTrade executes market orders in real-time.

Limit and Stop Orders

The order will be triggered if the predefined price is reached and either a new position will be opened or an existing one closed.

One Cancels the Other Order

(OCO) Two orders combined: when one is triggered the other will be automatically cancelled.

Main Order Types FAQ

  • When is the best time to use a market order?

    There are a few situations where the market order is the best choice. One is if you simply want the quickest execution possible. Another is whenever you’re trading an asset with high liquidity and an extremely tight spread. For example forex pairs with spreads of just a few pips, or stocks with a bid-ask spread of a penny or less. Another situation where the market order is acceptable is when you’re trading small lot sizes of under $1,000. Basically any time you want to get in or out of a position quickly a market order is best. The same is true when the cost of entry and exit is extremely low.

     
  • Where should I place my stop-loss orders?

    Determining where to place a stop-loss order is all about determining how much risk you’re willing to take. For example, if you buy a $100 stock and place your stop-loss at $90 you’re indicating a 10% loss is acceptable. This type of percentage loss is a common method for determining stop-loss levels. Another method is to use nearby common moving average levels, or other support or resistance levels to determine where a stop-loss should be placed. In any case your risk of loss should be no more than half your potential profit. So in the example above with a potential 10% loss, the profit target should by $120 (20%) at a minimum.

     
  • What trading strategy uses a One-cancels-the-other order?

    This is a risk management strategy where a stop-loss order is linked with a limit order to automate a trade. The stop-loss order is triggered if the loss becomes greater than the trader is willing to accept, while the limit order is triggered if the profit target of the order is hit. This allows a seasoned trader to enter a position, define the exit conditions, and put the trade out of their mind, knowing it will be handled exactly as they want, but without the risk of emotions entering the picture and messing with the trade.

     

These FAQs, comments/analysis do not take into consideration your individual personal circumstances and trading objectives. Therefore, they should not be considered as a personal recommendation or investment advice. They are intended for educational purposes only. Past performance is not indicative of future results. There is no guarantee that the contents or instructions will result in profits or not result in losses.