Understanding and using common types of order is very much necessary in the ETF industry because the market is highly volatile, and it is quite challenging to predict the price fluctuations. The ups and downs of the graph depend on several external factors, including interest rates, inflation, economic expansion or contraction, political events, and so on. To minimize losses, the UK traders are encouraged to use different type of it. Thus, they can manage their deals more effectively.
The use of these orders varies from broker to broker, but there are a few types of these which are widely accepted. Good knowledge about them can assist an investor in exiting and entering a deal. In addition, a beginner can also find out an ideal market.
Different types of orders
This is the most fundamental term and the first type of order that comes across. It indicates that the beginner has to enter the deal immediately. He needs to find an appropriate condition to enter trading in. Generally, short-term traders like day investors and scalpers depend on this type because it ensures quick entrance and exit.
Many people widely use this category during a trade. This one is quite unique to newbies. This entry order is set far from the existing prices. If the currency is dealt with at a predetermined value, the condition for this order can be met, and after this, a beginner can create a new position. There are multiple benefits of trading using this type. Among the benefits, the most amazing one is – you don’t have to be in front of the screen to execute the deal. Look for the breakouts in the chart to use entry order. However, if you fail to choose a high-end broker like Saxo, it will be tough to execute market orders with high precision. You can get more info here and improve your trading accuracy.
There are two sub-categories of this type –
For opening a trade
Sometimes limit order is used to find a better price to enter the platform. Suppose the EUR/USD currency pair is trading at a value of 1.1394, and a newbie thinks the value may fall down to 1.1294. Thus, he may place the limit order to purchase at a value of 1.1294.
For closing a trade
These can also be used to close a trade, and people do this when the market moves in their favor. For example, the EUR/USD is at the level of 1.2222, and a trader wants to exit it after receiving the profit of 10 pips. So, he has to set the limit to 1.2232 to sell the trade.
This category also has two sub-categories –
To enter or open
This is generally utilized for the breakouts. Suppose the current price of the EUR/USD pair is 1.1000, and a trader thinks that the price may rise to 1.1001. So, he can set a buy stop at the value of 1.1001. Similarly, one can use the sell stop if he realizes that the price may fall.
To close or exit
This provides some protection from a market crash. In the ETF world, this one is regarded as the most powerful risk management strategy.
For example, the USD/JPY is at the price of 1.1010, and a newbie now wants to reduce the possible risk. In this case, he has to determine the limit at which the deal will be canceled if the price starts moving against his luck. If he thinks that he will take the risk to 10 pips, he will set the limit to 1.1000. This means, when the graph comes to the 1.1000 and crosses it, the deal will be closed.
Placing these orders means the limits will be comfortable in the software. There is a button that can be used to get access to the tab. Use this knowledge to control your risks and profits.