Order Types Guide
Master all forex order types and learn when to use each one. From basic market orders to advanced trailing stops.
Basic Order Types
1. Market Order
A market order executes immediately at the current market price. You click "Buy" or "Sell" and the trade opens instantly at whatever price is available.
✓ When to Use
- • Need to enter/exit immediately
- • Trading during high liquidity (tight spreads)
- • Scalping or day trading
- • Market is moving fast and you don't want to miss the move
✗ When to Avoid
- • During news releases (slippage risk)
- • Low liquidity periods (wide spreads)
- • When precise entry price matters
- • Trading illiquid exotic pairs
Example:
EUR/USD is at 1.1000. You click "Buy Market" and your order executes at 1.1001 (1 pip slippage). Your position is now open at 1.1001.
2. Limit Order
A limit order executes only at your specified price or better. It waits patiently until the market reaches your target price before executing.
Buy Limit Order
Places an order to buy below the current price.
Sell Limit Order
Places an order to sell above the current price.
✓ When to Use
- • Want to buy at a better price during a pullback
- • Want to sell at resistance level
- • Swing trading with predefined entry levels
- • Not urgent—willing to wait for better price
✗ Risks
- • Order may never fill if price doesn't reach your level
- • Might miss the move if price reverses before hitting your limit
- • Not suitable when you need immediate execution
Risk Management Orders
3. Stop-Loss Order
A stop-loss order automatically closes your position at a predetermined price to limit your losses. This is the most important order type for protecting your capital.
How It Works:
- 1. You buy EUR/USD at 1.1000
- 2. You set a stop-loss at 1.0950 (50 pips below entry)
- 3. If price drops to 1.0950, your position automatically closes
- 4. Your loss is limited to 50 pips ($50 if trading 0.1 lots)
Buy Position Stop-Loss
Place below your entry price to protect against downward moves.
Sell Position Stop-Loss
Place above your entry price to protect against upward moves.
- • Place beyond key support/resistance levels
- • Use ATR (Average True Range) to determine appropriate distance
- • Risk 1-2% of account per trade maximum
- • Don't move stop-loss further away when losing—that defeats its purpose
4. Take-Profit Order
A take-profit order automatically closes your position when it reaches your profit target. It ensures you lock in gains even if you're not watching the market.
How It Works:
- 1. You buy EUR/USD at 1.1000
- 2. You set a take-profit at 1.1100 (100 pips above entry)
- 3. If price rises to 1.1100, your position automatically closes
- 4. Your profit is locked in at 100 pips ($100 if trading 0.1 lots)
✓ Benefits
- • Removes emotion from exiting
- • Guarantees profit if target is hit
- • Allows you to trade part-time (set and forget)
- • Forces you to have a profit plan
⚠️ Drawbacks
- • May exit too early if trend continues
- • Fixed target doesn't adapt to market conditions
- • Might miss larger moves
- • Consider using trailing stops for trending markets instead
Advanced Order Types
5. Stop Entry Order
A stop entry order (also called stop order) opens a position when price breaks outabove or below a key level. Opposite logic to limit orders.
Buy Stop
Opens a buy position above current price (breakout up).
Sell Stop
Opens a sell position below current price (breakout down).
Use case: Breakout trading strategies. Wait for price to confirm breakout before entering.
6. Trailing Stop
A trailing stop is a dynamic stop-loss that automatically moves in your favor as price moves, locking in profits while still giving room for the trend to continue.
How It Works:
- 1. Buy EUR/USD at 1.1000 with 50-pip trailing stop
- 2. Price rises to 1.1050 → Trailing stop moves to 1.1000 (your entry = breakeven)
- 3. Price rises to 1.1100 → Trailing stop moves to 1.1050 (50 pips profit locked in)
- 4. Price rises to 1.1150 → Trailing stop moves to 1.1100 (100 pips locked)
- 5. Price reverses to 1.1100 → Position closes automatically, 100-pip profit secured!
✓ Best For
- • Strong trending markets
- • Swing trading
- • When you want to "let profits run"
- • Breakout trading
⚠️ Not Ideal For
- • Ranging/choppy markets
- • Scalping (too volatile)
- • News trading (whipsaws)
- • Very tight trailing distances
7. Stop-Limit Order
A stop-limit order combines stop and limit orders. When price reaches your stop price, it triggers a limit order (not market order).
• Stop price: 1.1050
• Limit price: 1.1055
If price hits 1.1050, a buy limit order at 1.1055 is placed. Your order only fills if price stays at/below 1.1055.
8. OCO (One-Cancels-Other) Order
An OCO order places two orders simultaneously. When one executes, the other automatically cancels.
• Buy stop at 1.1050 (breakout long)
• Sell stop at 1.0950 (breakout short)
Whichever level is hit first triggers that order and cancels the other. Good for range breakout strategies.
Use case: Trading breakouts when you don't know which direction price will go. Also useful for bracket orders (combining stop-loss and take-profit).
Quick Reference: When to Use Each Order
| Order Type | Best Used For | Execution |
|---|---|---|
| Market Order | Immediate entry/exit, scalping, breaking news | Instant |
| Limit Order | Swing trading, better entry price, pullbacks | Pending |
| Stop-Loss | Risk management (ALWAYS USE) | When price hits level |
| Take-Profit | Locking in profits, predetermined targets | When price hits level |
| Stop Entry | Breakout trading, trend following | When price breaks level |
| Trailing Stop | Trending markets, maximizing profits | Moves with price |
| Stop-Limit | Precise entry during breakouts (advanced) | Conditional |
| OCO | Breakout strategies, automated exits | One fills, other cancels |
Key Takeaways
- Market orders execute instantly at current price—best for immediate entry during high liquidity.
- Limit orders execute only at your specified price or better—ideal for swing trading and pullback entries.
- ALWAYS use stop-loss orders—this is non-negotiable. Place beyond key levels, risk 1-2% max per trade.
- Take-profit orders lock in gains automatically. Use 2:1 risk-reward ratio minimum (100-pip TP for 50-pip SL).
- Trailing stops maximize profits in trending markets by moving your stop-loss as price moves in your favor.
- Master basic orders first (market, limit, stop-loss, take-profit) before using advanced types.