Terms like buy limit sell limit forex seem quite confusing. Isn’t it? Most traders get confused with these terms while placing their pending order. As a beginner, you must be facing the situation I guess. Well, it’s true that all these complex terms create confusion in the forex trading market. But once you come to know their basic definitions and uses, you will find this forex market a lucrative one to invest.
Let’s start with the definitions first
Why buy stop and buy limit forex? What is the difference between these options?
Buy stop buy limit forex are two important orders in the forex market. Traders must know its uses properly in order to make a profit in the forex trading business. But before you proceed, you need to know the difference between these two trading orders.
Difference between buy stop and buy limit forex
Both are complex terms in the forex market. A simple definition cannot define the whole thing in a precise manner. Therefore, for better understanding, let’s cite an example here, if you place a pending order above the market price, that order will be as Buy stop. Suppose the current price of EUR/USD is 1.0495, and you would like to buy when its price goes higher such as 1.0515. Under such circumstances, you need to place a stop order at 1.0515.
Similarly, if you place your pending order below the market price, the order will be called “Buy limit.” Suppose the current market price of EUR/USD is 1.0495, and you would like to buy EUR/USD when its price goes down to 1.0480. On the basis of this price level, you can set an order limit at 1.0480.
Difference between limit sell and limit forex
If you place your pending sell order above the market price, it will be known as “Sell Limit.” For example, the current price of EUR/USD is 1.0495, and you would like to sell it when its market price reaches higher 1.0515. Therefore, you must set a limit order at 1.0515.
Similarly, if you place a sell pending order below market price, then this order will be termed as “Sell stop”. Suppose the current price of USD/EUR is 2.0495, and you would like to sell it when its market price goes down to 1.0480. You need to place a stop order at 1.0480.
When to use buy stop forex trading?
You can use stop orders in forex trading when you believe that the market price is moving towards the same direction after exceeding a certain point. For buying orders, it should be above the current market price while sell orders below the current price.
When to use limit orders?
You can start using limit orders if you believe that the market price will move in the reverse direction after a certain period. For buying order, the order level should be below the current market price while the value of sell order should be above the current price.
From the above discussion, it is hoped that you got a clear conception regarding buy limit sell limit forex orders. To become a pro in forex business, you must gather proper knowledge on entry and exit options of forex trading. Happy trading!