Sell limit sell stop are some of the tools a forex trader can use to make headways in the forex market. Forex traders are not directly involved in the forex market. They do have their own accounts; they initiate actions regarding what they want to trade and how they want to trade it but not without a forex broker. The forex broker gets “orders” or “requests” form the trader on what to do regarding the trader’s account and eventually proceeds to make effective changes as requested by the trader.
One forex trading tool a forex trader uses to communicate with her broker is the forex order(s). There are quite a number of them but for the purpose of this article, we are going to focus on the following
- Limit order
- Stop order
- Stop-limit order
WHAT IS A LIMIT ORDER?
A limit order is an order to buy or sell a particular security at a specified price or at a price better than the specified price. Limit orders are of two types
- The buy limit forex order
- Sell limit forex order
- BUY LIMIT FOREX ORDER
A buy limit order is an order given by a trader to her broker asking her to buy a particular security if the price of the security falls to the stated limit price or even further than that. The trader buys these securities in hopes that their value would rise in future. If the value of the securities eventually rises, the trader sells them off to make profit. The trader can as well set a sell limit forex order to take care of this.
- SELL LIMIT FOREX ORDER
A sell limit forex order is an order given by a forex trader to her client to sell a particular security if the value of the security rises to a particular point or further. On a normal ground, traders sell their security when the price of the security rises above what the security cost. By doing so, they are able to make some profit from it. If the value of the security is expected to go down in future, the trader can sell the security at its current price and then buy them back when it is cheaper.
SELL STOP AND STOP-LIMIT FOREX ORDER
In forex trading, a sell stop is a trade order from a trader to a broker asking that a trade be executed in the best possible price once the price gets to a stated price or below.
A stop-limit order is a combination of the features of a limit order with that of a stop order. In a stop-limit order, two different prices are picked. At the first price, the specified action is initiated; this is known as the “stop”. When the value of the security gets to the second price, it is said to be outside the trader’s investment target.