Each investor in the Forex trading uses many kinds of orders in his business, and all of these types of orders used in a particular circumstance, so keen shops in any kind of goods to follow the movement of price of the product which he plans to be traded continuously in search of an opportunity to use the type appropriate types of orders.
You may be interested in trading cars for example, it is natural to be following up the prices of cars are constantly If you find that the price of a car has become very low Vstmutir to buy them on the basis that the price will rise later, but you may find it appropriate to wait some time before the offer to purchase for you expect the price to fall more before coming back up.
This requires you to follow-up is ongoing, and found that the appropriate price for the purchase offer to buy or to wait for price to drop more then progress on the purchase.
As well as trading in currencies ..
When watching the currency you are waiting for the right opportunity to buy a currency when they expect that the price will not drop much after that but will resume rising, it may need to wait some time until the rate drops more then progress on the purchase.
If we assume that you are watching the price of the euro was at this moment EUR / USD = .9000
I found through your analysis of the price that the price of the euro will fall further than this, but it will resume rising .. What do you do?
Exactly .. Immediately seize the opportunity and buy euros because you expect the price will rise. Will ask to buy euros at the current rate.
When they do have used the first type of command which is the market Market order.
Market Order Market Order
An order to buy or sell a currency immediately and the current price of the market.
To return to the previous hypothesis that the price of the euro EUR / USD = .9000
Suppose you and through your analysis of the euro, you expect that the price of the euro will fall more before returning to the height and you expect that the price of the euro will fall first to be up to EUR / USD = .9850 and then re-elevation .. What do you do?
Yes .. You have to wait until the price drops and up to .9850 and then you buy.
But that may require you to wait several hours until it reaches the price of the euro to the price at which you expect, does that mean that you have to stay glued in front of a computer several hours waiting for this moment?
Here comes the role of limit orders in advance Limit entry orders
Command specified in advance Limit Entry Order
An order to buy or sell a currency at a specified price in advance by you, if indeed the price of the currency to the price set by the order will be executed and if you do not reach the command is executed.
In our example above will determine the rate of .9850 for the purchase and so you say to the brokerage company that deals with it: If the price to the price of the euro bought 0.9850 euros lot to me - or any number of croaker you want - then you can leave your computer and take care of another. If the price of 0.9850 to the euro actually the company will buy you a lot of euros and if the price reaches 0.9850 will not implement it.
Will do so by placing orders by the workstation platform, which you use to deal with the brokerage firm and you will find complete instructions for how to place limit orders in advance an issue that require only a few clicks of your mouse.
This is the interest of the commands give you a predetermined area of interest with other things without having to wait.
Types of limit orders in advance
There are four types of commands pre-set covering all potential price movement of a currency which are to come out and are accessible:
Out pre-set orders:
Order to minimize loss Stop order.
Is profit Limit order.
Orders of entry specified in advance:
Entry order for the price of an apostate Entry limit.
Entry order rate constant for Entry stop.
I hope you do not feel overwhelmed by these species, the purpose of which is to cover all the possible price movement so that you can when your analysis for the price of the currency to put these commands to be executed automatically without the need to remain glued to the computer for long hours, due to these types of orders can be for shops that makes his work in the speculation in the currency in accordance with part part time where all you have to analyze the exchange rate if and reached the conviction on the direction of price movement will develop a sale or purchase orders and are determined in advance where you can then leave your computer and interest in the work last and you are assured that whatever the movement currency, the orders will be executed as set in advance and automatically and without intervention from you.
With a little practice you will find that dealing with these commands a very simple matter.
Now we will explain in detail and each type of limit orders in advance:
Orders out predetermined
Order to minimize loss Stop order
Which is specifying the price at which it will close the deal if the result is lost.
For example: Suppose you bought a lot of euros at EUR / USD = .9000 on the basis that you expect that the price of the euro will rise after that.
You know that every point of a high rate of the euro over the previous price $ 10 per win normal account - 1 $ in the mini-account - all point down the price of the euro for the previous price is losing $ 10.
Suppose you bought a lot of euro price the past and you would like to leave the device and stop-up, but you are afraid to fall euro continues to decline means that your loss will increase if the price fell 30 points to lose $ 300 and if it continues to decline more and fell 60 points to lose $ 600 and so on.
You can specify in advance the extent you can afford to lose this deal is using the reduction of the loss Stop order so that the pre-determined price at which the transaction will close in case of loss.
In the previous example I bought a lot of euros at 0.9000 on the basis that its price will rise, will determine the price reduction of the loss .9850 and so you say to a brokerage firm that buys you a lot of euros at 0.9000 if the price fell and began to lose, and has reached the price to .9850 Vaglqgua the deal for fear that Rate continues to decline and that your loss has identified earlier in this transaction by 50 points.
You can then determine the price reduction of the loss of that leave your computer and you are assured that whatever the price of the euro will not lose more than 50 points because when the price of the euro to 0.9850 and the company will automatically close the deal and will not lose more.
On what basis is a price reduction of the loss?
Answer: The matter depends mainly on your analysis of the movement of the exchange rate could reach the conclusion that the price of the euro after hitting a price of .9000 will return to the high and on that basis will decide to buy it, but that does not mean that the price when it comes actually to .9000 will resume rising immediately, but may drop some more thing and then come back to the 0.9890 high has been reduced to 0.9875 and then come back up, no matter how accurate your analysis was rarely able to determine the point at which the price has come back exactly the height ..!!
But through the analysis of price movement up to the conviction that the price of the euro if it reaches the price of 0.9850, it means that your analysis is wrong - or have occurred within a political or economic - and therefore as long as the price reached this point it will not come back rise and will continue to decline, at this particular point will reduce the rate of loss at any price you lose with it the hope that the price will resume rising.
Is important to minimize loss
A rule that says: Always trade with stops which do not trade until after the pre-set of your loss.
What does this mean?
Often buy some currency traders on the basis that the price will go up or sell a currency on the basis that the
price will drop, but things are not going as expected and the price begins Palmaxh and start Loss:
20 points .. Significant price improvement will resume .. But does not improve.
40 points .. It does not matter will return for improvement .. But does not improve.
80 points .. My loss has become a big price improves Perhaps I'll wait for the lighter of my loss .. But does not improve.
120 points .. Problem! I can not accept this loss will wait perhaps even slightly improved price .. But he is not getting better ..!! .
200 points .. Wow Aalitni accepted the loss when she was 40 points!!
So as you can see that leaving things without pre-determined price, which will close the deal in which in case of loss makes you vulnerable to the psychological impact on the "hope" to improve price and return to profit or at least mitigate the loss and may lead you this "hope" that multiply your losses several times, makes you have to accept a heavy defeat.
Which one is better to be exposed to such a critical situation, or that may be identified in advance the price at which he has lost hope on the basis of analysis and not on the basis of the psychological impact .. Connect you to the analysis that the price if Axk 40 points meaning that he would not return for the improvement and that your analysis was wrong or may have taken place in what circumstances and will not return after the price of the improvement, the losing 40 points better than losing 200 points can mean thousands of dollars.
Volubly loss, Ltd. is a professional recipe shops.
It is important that this loss is based on analysis and not on the basis of expectations based on the psychological effects, which claimed the accounts of many of the traffickers.
Q: If I will set my loss at a point very close to the point of entry so as not to lose a lot if Okhtit in the analysis, for example, if you buy the euro at 0.9000 I will set my loss at a price of 0.9895 a mistake if any analysis you will not lose more than 5 points, the better is not it?
Answer: No, not as well ..!!
Are you sure one hundred percent of the price when it comes to pick exactly .9000 height?
As we mentioned, even if your analysis is true, rarely able to determine the price at which the price has to rise will resume exactly .. The price reaches 0.9890 and then re-rise, if you've identified your loss at 0.9895 meaning that you will come out a loser 5 points at a time when your analysis it is true, if you give yourself more room and the patient some thing to came out a winner rather than come out a loser 5 points .
You can not define your loss rate is very close because you do not know the exact price at which the price will return him to rise.
You may not and to determine your loss rate is too far so as not to become your loss heavy.
But like a middle range ..!!
Any long enough so give yourself a way to get a profit and is close enough so that the limit of your loss as much as possible in the event of a loss ..!!
If you just how many points should I set the price limit of loss?
Answer: You must make the analysis is the basis in determining that, but in principle does not favor that at least a point reduction of the loss of 30 points when you buy the euro on the price of .9000 do not prefer to determine the loss of more than .9870 because it contained very low price so that this point and then go back up.
In fact, the point that sets the then rate of reduction of the loss stop is one of the most important decisions that must be identified in the deal, an issue that depends on your ability to bear the loss and the accuracy of your analysis and your style of trading is generally an issue that varies from person to person and improve practice and training session and training.
Let us take some examples of how to determine the point of reduction of the loss:
Example 1:
Would buy a lot of euros at EUR / USD = .9850 select point loss stop?
Answer: We will put order to purchase .9850 euro on the price and put the stop on the price of 0.9810 and thus determine the loss that occurred with 40 points.
Example 2:
Lott will sell at £ GBP / USD = 1.6098 select point loss?
Answer: We will put an offer on the price of 1.6098 and put the stop on the price of 1.6143 and thus determine the loss that occurred with 45 points.
Example 3:
Will buy the yen on the price of USD / JPY = 118.50 select point loss?
Answer: We will put order to buy yen to the price of 118.50 would be interested in pushing the price of the yen against the dollar, so we will put the stop at a price of 119.00 because if he has reached the price of 119.00 means that the yen has fallen .. Fallen currency indirectly, and thus we define our loss by 50 points.
Example 4:
Will sell the Swiss franc on the price of USD / CHF = 1.4560 select point loss?
Answer: We will put an offer on the price of 1.4560 and concerns us here to fall franc, we will put the stop price at 1.4500 because he got for that price may be increased Vafrenk franc currency indirectly, and thus we define our loss with 60 points.
General rule
Order to minimize loss Stop order
Currencies Direct
When you buy .. The stop point is less than the purchase price.
On sale .. The stop point is greater than the selling price.
Of currencies other than the direct
When you buy .. The stop point is greater than the purchase price.
On sale .. The stop point is less than the selling price.
Is profit Limit order
Which is specifying the price at which he has closed the deal in the case of a profit.
For example: Suppose you bought a lot of £ at and what you expect the pound to rise 80 points. In order to get the profit you have to wait until the pound actually rises 80 points may require several hours, you can use here is to reap the profit limit order sets the price at which you want to close the deal in the case of the profit.
If we assume that you bought a pound at 1.6000 and you expect to rise Fairy 80 points, you will then be put is to reap the profit at a price of 1.6080, which you say to the brokerage firm if the price of a pound to 1.6080 closed the deal, will execute this command automatically without the need to be Mtwajadda at the moment.
You can set this up after you leave your computer and you are assured that if the price reached to the point that you selected will be able to reap a profit without the fear that the price goes back down and get lost and you have opportunity to do so to get 80 points.
On what basis can I put my point of profit?
Issue depends on the store and his style of trading Strategy Some specify in advance a certain number of points, and some specify a fixed amount, but the best method must be determined on the basis of the analysis if the analysis indicates the possibility of high rates for a certain number of points before they come back and drops it is better to be determined point profit limit order at this point or a point close to it.
Let us take some examples of how to determine the point of profit:
Example 1:
I bought a lot of euros at .9500 select points profit
Answer: We will point profit limit order at a price of 0.9550 which we ask the company to close the deal when the price of the euro to 0.9550 and thus determine in advance won by 50 points.
Example 2:
Sold at £ 1.6230 select point profit.
Answer: The deal began to sell and the profit achieved if the price of the pound, we will reap the profit is at a price of 1.6170. Thus, we define a profit of 60 points.
Example 3:
I bought the yen at a price of 118.50 points, select the profit.
Answer: I will put points profit at a price of 118.00, the yen when up to this price has risen 50 points, this matter may be identified Rbjee with 50 points.
Example 4:
Sold at a price of CHF 1.4500 select point profit.
Answer: profit achieved when the price drops franc because the process began to sell, I will put the profit at a price point of 1.4620 and so I have set-profit with 70 points.
General rule
Is profit Limit order
Currencies Direct
In the case of purchase, the price is profit is greater than the purchase price.
In the case of a sale, the price is less profit from the purchase price.
Of currencies other than the direct
In the case of purchase profit is less than the purchase price.
In the case of selling the profit is greater than the purchase price.
If you find it difficult to understand or save these rules, it will be useful and very easy you have to remember the charts the following, which shows where the will is to minimize loss Stop order and ordered the profit Limit order for the currencies of the direct and indirect In the cases of buying and selling each of them as you see in the following table :
Currencies such as the euro and the pound direct
When you buy direct currency
Stop command is below the purchase price in the graph
Limit shall be ordered over the purchase price in the graph