Forex open orders is an order issued by a forex trader to the attending broker to buy or sell a security anytime possible within the time range specified by the customer’s open order. It can be likened to a bank standing order (an instruction given to a bank by an account holder to pay a certain amount of money to a specified account at regular intervals within a certain time range). In other words, this order stays in effect until the order is executed, expires, or is cancelled by the forex trader who issued the order.
TYPES OF FOREX OPEN ORDERS
A forex open order can be executed by a broker according to their clients trading style as well as the kind of orders the broker or brokerage firm can offer. Most brokers offer the following types of orders
STOP LOSS ORDER
In a stop loss order, a forex trader specifies when a broker should buy or sell a security. If an open order is not going as expected, an already initiated stop loss order can cancel the open order. It is a defensive measure that can be used to prevent great losses. This does not mean that stop loss orders can be used to completely prevent a loss; it can only be used to stop further losses when the currency involved is going headlong down the drain.
TAKE PROFIT ORDER
This is an order that can also be used to cancel a forex open order. The function of this order is to hold back profits made from a trade when the profit gets to a certain level. This order can also be used to prevent losses per adventure the currency in question starts to lose value, thereby generating losses.
A market order is a type of forex open order which demands that a trade be executed immediately at the current market prices. It is the simplest of all order types and is also known as unrestricted order due to its nature. Its features of simplicity and no restrictions guarantee execution at a low commission rate.
A limit order is an order to either buy or sell a security if the security ever gets to a specified price or something better than the price specified. Unlike a market order, limit orders have time restriction, and at such, there is no guarantee that the order would be carried out since it is uncertain that the security in question would get to the price specified in the order before the expiration of the order.
TRAILING STOP ORDER
This order can be used to automatically close a trade if the trade moves in an unfavorable direction. Just like the name implies, a trailing stop order follows the market price of a security at a safe distance and carries out a “self-terminate” action if the trade goes in an unfavorable direction.
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