How to Distinguish Different Types of Forex Orders and Professional Order Placement Techniques

To generate consistent profits from the forex market, traders need to master different types of trading orders. Placing orders incorrectly or at the wrong time can lead to losses. This article will explain in detail the important types of orders and how to apply them effectively.

What Are the Basic Types of Forex Orders?

Trading orders are tools used by investors to execute buy or sell transactions in the forex market. Each type serves a different purpose and has its own method of use. Understanding each type will help you find the optimal entry point and maximize profits.

Market Orders – Executing Immediately on the Market

###Market Order(

A market order allows traders to buy or sell immediately at the current price displayed on the screen. When you decide to place an order, it will be executed instantly.

How it works: Suppose the EUR/USD pair has a Bid price )the level the broker buys from you( at 1.32211 and an Ask price )the level the broker sells to you( at 1.32366:

• A BUY order will match at the Ask = 1.32366
• A SELL order will match at the Bid = 1.32211

This type of order is very suitable for short-term traders and scalpers because it executes immediately.

Pending Orders – The Strategy of Professional Traders

Pending orders )allow you to place an order in advance without watching the chart continuously. You can set a target price, and the order will automatically activate when the price reaches that level.

(What Are Buy Limit and Sell Limit Orders?

What is a buy limit order? Simply, a buy limit order allows you to buy at a lower price than the current market price. Conversely, a sell limit order is to sell at a higher price than the current market price.

Real-world example:

• EUR/USD is currently trading at 1.2432
• You predict the price will rise to 1.25 then fall
• You place a Sell limit at 1.25, which will automatically execute when the price hits that level
• If you think the price will drop to 1.23 before rising, place a Buy limit at 1.23

This “buy low, sell high” approach is favored by experienced traders.

)Stop Orders – Triggered When a Trend Occurs

Buy Stop orders are used when you want to buy only after the price exceeds a certain level. It differs from a buy limit in that it is activated when the price rises, not falls.

Sell Stop orders are the opposite; you sell when the price drops to a specified level.

Example: EUR/USD is at 1.2323 and trending upward. You anticipate a breakout at 1.24. Instead of waiting, you place a Buy Stop at 1.24, and the order will automatically activate.

Essential Risk Management Orders

###Take Profit – Lock in Profits When Goals Are Reached

Take Profit is an additional order linked to the main order, automatically closing the position when the price reaches your desired level.

• If you are in a BUY position → Take Profit is a Sell limit
• If you are in a SELL position → Take Profit is a Buy limit

Example:

• You BUY EUR/USD at 1.2345
• Set Take Profit at 1.24
• When the price hits 1.24, the Sell limit order automatically activates
• Profit = 1.24 - 1.2345 = 55 pips

###Stop Loss – Protect Capital as a Priority

If the trade moves against your expectations, Stop Loss will automatically exit to limit losses.

• If you are in a BUY position → Stop Loss is a Sell stop
• If you are in a SELL position → Stop Loss is a Buy stop

Example:

• BUY EUR/USD at 1.2345
• Set Stop Loss at 1.23 for protection
• If the price drops to 1.23, the Sell stop activates
• Loss = 1.2345 - 1.23 = 45 pips

Experienced traders always set a Stop Loss for every order, pre-determining an acceptable loss level. This helps preserve capital and continue participating in the market.

###Trailing Stop – Advanced Tool

Trailing Stop automatically adjusts the stop-loss level as the price moves, maintaining a set distance you choose. It is very useful when you are in profit and want to protect that profit.

Note: Trailing Stop is suitable for professional traders because it requires the trading software to be running continuously. If the software is closed, the order is canceled automatically.

Example:

• Sell USD/JPY at 88.80 with a Trailing Stop of 20 pips
• Initial stop-loss at 89.00
• Price drops to 88.60 → Trailing Stop automatically adjusts up to 88.80
• Price continues to fall to 88.40 → Trailing Stop adjusts down to 88.60
• The trade continues as long as the deviation does not exceed 20 pips

How to Place Orders on MT4/MT5

These are the two most popular trading platforms today:

Step 1: Select “New Order” to open the trading window. Enter the trading volume ###for example: with a $1000 account, start with 0.01 lots for safety###

Step 2: Choose the order type:

• “Market Execution” for market orders (execute immediately)
• “Pending Order” for pending orders (with options like Buy Limit, Sell Limit, Buy Stop, Sell Stop)

Step 3: Set Take Profit and Stop Loss if needed

Step 4: To close the order, right-click on the open position and select “Close”

Important Notes When Placing Orders

1. Always set a Stop Loss to control maximum risk
2. Determine Risk/Reward ratio before entering a trade (at least 1:2)
3. Do not expect 100% accuracy – the market always has unexpected fluctuations
4. Practice on a demo account before trading with real money
5. Manage capital wisely – do not risk more than 2% of your capital on a single trade

Conclusion

Understanding the different types of orders and how to use them is the foundation for becoming a successful trader. From simple market orders to more complex pending orders, each has its own application. Combining buy limit orders with risk management tools like Stop Loss and Take Profit will help you build a sustainable trading strategy and achieve long-term profits in the forex market.