A Lesson in Limits and Stop Orders

DailyForex.com Team

This has been a slow trading week for me, seeing as how an internet connection is a huge necessity to forex trading. Our internetForex stop orders and order limits service provider went AWOL for a few days, leaving me with lots of opportunities to profit from a depreciating U.S. dollar, but alas, no way to actually do it. Oh well, that's life here in Africa.

Finally, my internet service was restored. And it was?»¿ just in time for Big Ben's historic press conference the other day. And that was really good, ‘cause I was absolutely certain that Ben was about to grease the wheels for more easing of the U.S. monetary policy. And we all know what that means. Yep, the dollar sinking even lower.

It's 6:12 p.m. here in the GMT time zone, a mere three minutes before Ben is to take his seat so that the world can question his motives. I start the application loading; surely three minutes is enough time. You'd think that, but you'd be wrong. Maybe in the developed world it's a fast load and login, but here in the jungle? Well, let's just say I'd have been better off transmitting my EUR/USD (buy!) and AUD/USD (buy!) orders through old fashioned drums.

It's 6:18 p.m. here before I'm logged in properly and Ben is already starting. In my mind I can see the dollar dropping one pip at a time. But I know exactly what I want and I get my two orders in pretty darn quickly, complete with stops and limits. I don't want to watch, I want to be surprised. So I shut down the application, trusting my stops and limits to work, and wander into the kitchen to get dinner going.

What am I doing? The kids' food can wait! I rush back to the laptop and open the application again. Come ON! Okay, I'm in. Only one trade left open. That means my stop or limit order executed. Gulp. Which one, which one?

Limit order! Yeah! Or maybe not yeah, it could have gone higher, right? I'm only ahead $5.50 – who knows where it could have gone. But, hey, I'm happy ‘cause that's way better than the stop order being executed isn't it?

One open order, and it's EUR/USD. I'm just in positive territory but I'm thinking it could move lots higher so I remove the limit. I'm $6.50 ahead before it starts to backtrack. Oops! I watch it move lower, lower, lower – I'm back where I started. Sigh. Now, I'm losing, losing, losing. Ugh.

I just know it's going to swing back the other way, so I remove my stop order now. Down $5.00. Then it starts to rebound. Slowly. I'm staring at my computer screen for nearly 15 minutes before I move back into positive territory; I can't keep waiting; I'm marginally ahead so I cancel the order.

As I walk back into the kitchen to try to get dinner going (again) it dawns on me. Here I was worried about a few dollars profit ($8.00 total!) while there are starving children in Africa!

DailyForex.com Team
The DailyForex.com team is comprised of analysts and researchers from around the world who watch the market throughout the day to provide you with unique perspectives and helpful analysis that can help improve your Forex trading.

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