forex #9

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FOREX Order Types and How to Use Them:
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When you open your trading station software (provided to you
for fr.ee by any one of our recommended brokers), you will
find there are TWO main ways to ENTER a market or, said in
another way, there are two ways to place an initial order to
buy or sell any currency pair.


(AFTER we discuss the MARKET and ENTRY order, we'll cover
how to protect your profits and limit any potential or
realized losses with the STOP and LIMIT order).


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MARKET ORDER - an order to buy or sell a currency pair at
the market price the instant that the order is received and
processed (within seconds of hitting the "OK" button on your
screen). When a market order is placed, you are simply
saying "I'll buy or sell the currency pair at whatever
price it is at when my order gets processed."


Example: If you are looking to place an order for JPY (YEN)
when the dealing price is 104.00/05, a market order will
request to buy JPY at 104.00 or will request to sell JPY at
104.05.


Within the courses we have for sale at RapidForex.com, 99%
of the time, we will have you avoiding MARKET orders. The
reason? They tend to compel the trader to act on impulse
instead of according to a trading plan.


ENTRY ORDER - an order to buy or sell a currency pair when
it reaches a certain price target. This can be any price in
theory. You could set an entry order for the low price of a
time period, or the high price of a time period. For
instance, in one of our courses (Rapid Forex Education
Manual 9.0) we teach you to always set an ENTRY order to be
the same price as the *open price* of the time period. When
you place an ENTRY order to BUY, for example, you are simply
saying "I want to buy this currency pair at a certain price,
if it never reaches that price, I don't want to purchase the
pair."


Example: the current "real-time" quote for the EUR/USD is
1.3317. Your analysis shows that IF the pair hits 1.3329 (a
key resistance point) that there's a high-probability the
pair will turnaround (retrace down) so you wait for it to
hit 1.3329 and then decide to place an ENTRY order to sell
the EUR/USD at 1.3322.


The ENTRY order above shows you how you are fully-empowered
to pick a price and place an order to sell at that price. If
the market hits 1.3327 ... great, you now have an OPEN
position and, as long as the EUR/USD pair keeps dropping and
you close out (exit) your trade at a price lower than
1.3327, you make m.oney.


And, if you don't get in the trade, via your ENTRY order,
don't worry. New trades are constantly developing and if
your order entry doesn't get filled you can't lose any
money. Learn not to be upset when an ENTRY order isn't
filled. You are saved most of the time anyway because the
currency pair did the opposite of what you thought. You
would have lost money, most likely, if it did get filled.
Remember, when orders are not filled, it means you never
risked any money!


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After your ENTRY order is placed, you can set a STOP and/or
LIMIT order if you desire. STOP and LIMIT orders are both
ways to exit a trade, automatically (i.e., without closing
out your position via the click of your mouse - manually),
after the trade is entered.


A STOP order (something we always recommend) is used to stop
losses. A LIMIT order (recommended if you can't monitor your
open trade) is used to redeem profits. Where these orders
are placed, in relation to your open trade, depends on the
direction of the entry order.


Example STOP order: If you have an open buy position on
USD/JPY, which you bought at 104.20, and you want to set a
stop order in case the U.S. Dollar starts to depreciate
against the YEN, to stop your loss (or limit your loss -
however you want to look at it), you could set a stop order
at 104.00, thus closing your position at a 20-pip loss.


Tip: a STOP order is always placed BELOW the current market
value of that currency pair (if you are in a long trade).


Example LIMIT order: Assume you placed an ENTRY order to BUY
EUR/USD for 1.6100. You might place the STOP order at 1.6081
(limiting your loss to 19 pips) but, at the same time, you
could place a LIMIT order for somewhere around 1.6171. If
the currency pair reaches that price level, the LIMIT order
becomes a market order to sell, or close out, the BUY
position for a 71-pip profit.


Tip: a LIMIT order is always placed ABOVE the current market
value of that currency pair (if you are in a long trade).


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This is all you really need to know in terms of placing
orders. It's really not that complicated and, of course, our
courses will walk you through the finer points of
calculating your entry and exit points and ensuring you know
how to scale in and out of trades with ease and precision.


If you've ever traded ONLINE before, maybe using e-Trade or
a stock brokers online software package, you will be
pleasantly surprised at just how intuitive, fun, and easy it
is to use the desktop-based online software that a reputable
FX broker can provide you.