Three Forex Order Types That Every Trader Needs to Know

If you're getting ready to make your first trade in the wide, wild world of Forex trading, the term "order" should be solidified firmly into your vocabulary, as you'll likely be using it every single day! If you don't already know, orders are what those in Forex trading call the request to buy or sell currencies. Knowing what type of order you need to place will be crucial in determining your success as a Forex trading professional. Read on to get a quick crash-course in three of the most basic types of Forex orders that every trader needs to know.

Market order. By far the most common type of Forex order, the market order is the most basic type of Forex trading exchange and makes up the bedrock of the Forex trading market. A market order is simply a command to buy or sell a currency at the price it is listed at instantly. Usually, this occurs as soon as you click your mouse button, as these commands are transmitted within seconds of placing your market order. Basically, when you put in a market order, what you are saying is "I consent to purchasing or selling X amount of Y currency at the price it is currently listed at."

Entry order. An entry order is different from a market order because it specifies that you are only interested in buying or selling a currency when it hits a predetermined price. You can purchase or sell a currency only when it hits a high or low that you have specified in advance, which can be especially useful for those using automated systems or who cannot continuously monitor their accounts. You will need to use your knowledge of technical and fundamental indicators to decide what your entry and exit points should be on your own, or you can go by the advice of a number of Forex trading experts who will be happy to share their knowledge with you. Essentially, when you place an entry order, what you are saying is "I consent to purchasing or selling X currency, but only if these certain conditions have been met by the market today. If not, I do not wish to enter the Forex trading market."

Stop order. Unsurprisingly, a stop order is used to prevent losses by stopping your market or entry order at a certain point if using an automated system. A stop order is always placed below the current market value of the currency pair that you're looking to trade; if the currency pair is already undervalued, your entry order will not permit you to enter the market in the first place.

As a beginner in Forex trading, it is worth the time to take a few hours to learn everything that you can about every order type that's commonly used on the market, as these will become the "bread and butter" that will help you make money trading currencies. Getting a good education in Forex trading will be what makes or breaks you as a trader, so before you start trading, make sure you check out a beginner-oriented trading site that will help you grab the ropes!