There are many different kinds of “orders” that can be used when making a trade in the Forex market, and the sheer variety of them can be intimidating and confusing to someone just starting out. Even for the trader who has already gotten their feet wet a couple of times, it's never a bad idea to go back over the options available and make sure that you have everything down.
There are several basic types of orders, but this article will concentrate on only six of them to keep things simple, and keeping orders as straight forward and simple as possible is one sure sign of an experienced trader.
Market orders are orders that are made by buying a currency pair for the market's current quoted value. For example, if the EUR/USD=1.4312, you would immediately get 1.4312 USD for one Euro. With market orders, you make trades with a single click, and you're in the market. There is little to no waiting.
A limit order is made when you want to wait for a currency pair to hit a specific price. If you think you see a trend, but don't like the current price, you can set an order to buy when your ideal price is hit. For example, if USD/JPY is at 120.25, but you prefer it starting at under 120, you can put in a limit order for 119.99. If the currency falls to that, you buy in. If it doesn't, you don't get involved. A limit order can also be used for picking a point to at which to sell.
A “Stop-Loss Order” is an order to sell at a specified exchange rate that is below the current market rate. This can be referred to as a Forex trader's “safety valve.” A stop loss order means if the trade turns against you and usually this is done to liquidate part, or even all, of an open position when the market conditions turn enough to cause the open position to lose value. In other words, this is put in place to minimize losses if things go really badly, so the trade is automatically closed before you can lose anymore. This order can also be used to get you into the market that the specified price or worse.
GTC (Good ‘Till Cancelled)
With a GTC order, the order is good until you cancel the order or the order is triggered by the market.
GFD (Good for the Day)
GFD orders last until the end of the trading day. What time that is depends on what time zone and nation you live in. This means you're betting that by the end your order will be triggered, or if you're not, that it's time to move on anyway.
OCO (Order Cancels Other)
An OCO is an order where you set up for two possible orders based around two separate values that work as “triggers.” When the market hits one trigger, that order is put in and the other automatically cancelled.
Simple orders are usually the best. Keeping in mind your options here and sticking with the normal tried and true orders will help you to guarantee trading success.