By: Charley Warady

To trade Forex successfully you need to know that there are more than one Forex order types. It isn't just a matter of buying and selling. The Forex market is slightly different than the Farmer's market. To simply place a Forex order at the market price for both buying and selling can be done, of course. But there are other options and some of them can save, and even make you money.

When you place a Forex order “at the market” you are going to get the price of closest buyer or seller (depending on what you want to do) at the time your order is placed in the market. It's not necessarily the price you see on your screen at the time. You have to take into account the time delay. This may seem like split seconds to you, but it only takes that amount of time for the market to change. The price you receive back from the broker may have worked to your advantage or your disadvantage, but when you do this, you have to allow for a couple pips either way.

Putting a limit on it

One type of Forex order that is commonly placed is referred to as a “limit order” because that's exactly what it does. It puts a limit on the price you can receive back from the broker. When you put in an order at a certain price, the trade has to be executed at that specific price. You have to keep in mind that if the market simply touches that price, the order may not necessarily be filled. There are other orders in there also and yours may be one of many. However, if you see the market go through your limit order, you must be guaranteed a fill. It's only logical. All buys and sells at a certain price must be filled before the market can move from that price.

When you place a limit on a Forex order it gives you the flexibility of walking away from your computer screen for a while. Particularly if your order is somewhat away from where the market is trading. You know what you want to do and you know when you want to do it. There's no need for the market to be there. You can place your order accordingly.

Stop the loss

Whether you want to be assured of a limit to your loss, or you want to be assured of protecting your profit, the best usage of this particular tool is a stop loss. When you're in the market and you want to protect yourself from unnecessary losses, you put in a Forex order to sell below where the market actually is. If this were a regular order it would naturally be filled immediately; but because it is a stop-loss, the broker waits until the market goes through the price before he can fill it.

On the other hand, this can also be used to protect profits. As the market goes your way, you move your stop loss up (or down) so that you don't give back money you've made. It's a smart thing to do.
 

Plan your strategy

Because you have the options of different Forex order types, it's important to plan your strategy and have all your orders in place. Whether they're market orders or any other type, stick to your plan and protect your profits.