Forex or the foreign currency exchange market, offers similar methods to traders for purchasing and selling currencies as is offered by stock market to stock traders. Various types of order are offered for the creation of a transaction, with each one having its own set of advantage. In limit order there is a guarantee of transaction price, but not of the original execution. When ideal prices are not achieved, it is not possible for open limit order to be filled.
Optimal Purchase Price
When you have a limit order, it is an effectual strategy to ensure that you a favorable price at your side when you move into a Forex position. There is high volatility in the Fore market and the prices vary very fast. The conventional order of the “market” doesn’t provide any surety about the price achieved by you when you buy currency. There is instant movement in the market and you receive price quotes based upon the time when your order enters the international Forex network.
When you place a limit order, it sets up the maximum of what you want to put into your transaction. This way you are stopped from moving into a bad position at a price that is higher than what you would like. But, when prices are not leveled down to match with your limit order’s conditions, then you have the chance of losing everything. Before you utilize on this strategy, determine the price you want to get to for filling the order, and then put a price limit order on the trading software.
Optimal Sale Price
It is required to sell currency in unstable terms when you are shutting down a Forex position. Generally, you would expect to sell at a price that is highest. However, instant variations can bring down your sale to a price which is much lower than you want. When you have a sell limit order, you can mention the minimum price for selling. And, when the prices don’t come up to this margin, your position is retained. When the prices go up beyond this margin, you are filled and your sale is facilitated. Similar to any other order in the trading software, the sell limit order is also entered. A plain switch is offered by most of the software for choosing a limit order on the order of the market.
When trading, it is not always possible to spend all of your time on the computer. Sometimes you have to go for breaks, and it may happen that the prices may vary and become favorable for you. When you have a limit order, it is possible to get off the system with the guarantee that your position undergoes liquidation at a level of profit that is satisfactory for you. And, it is not necessary that you should be present on the computer. Your position will remain constant unless and until the prices don’t fulfill your criteria and the limit order does not undergo execution.