Forex offers several order types for different situations. Knowing when to use each type helps you enter and exit trades more effectively. From instant market orders to complex pending orders, each serves a specific purpose in your trading.
Instant Execution Orders
Market Order
A market order executes immediately at the current market price.
When You Buy: Fills at the ask price When You Sell: Fills at the bid price
Pros:
- Fills in normal conditions, though the price is not guaranteed
- Instant entry or exit
- Simple to use
Cons:
- May experience slippage
- No price guarantee
- Can fill at unfavorable prices during volatility
Use When:
- You need to enter or exit immediately
- Getting filled matters more than the exact price
- Market is liquid and stable
Instant Execution with Deviation
Some brokers allow you to set maximum acceptable deviation:
- You click buy at 1.1000
- Set deviation: 2 pips
- Order fills only if price is between 1.0998-1.1002
- If outside this range, order is rejected
This limits slippage but may cause missed trades.
Pending Orders
Pending orders execute automatically when price reaches your specified level.
Buy Limit
Places a buy order BELOW current price.
Logic: "I want to buy, but at a better (lower) price"
Example:
- Current EUR/USD: 1.1050
- You place Buy Limit at 1.1000
- If price drops to 1.1000, order triggers
- You buy at 1.1000 or better
Use For:
- Buying at support levels
- Getting better entry prices
- Trading pullbacks in uptrends
Sell Limit
Places a sell order ABOVE current price.
Logic: "I want to sell, but at a better (higher) price"
Example:
- Current EUR/USD: 1.1000
- You place Sell Limit at 1.1050
- If price rises to 1.1050, order triggers
- You sell at 1.1050 or better
Use For:
- Selling at resistance levels
- Getting better entry prices
- Trading pullbacks in downtrends
Buy Stop
Places a buy order ABOVE current price.
Logic: "I want to buy if price breaks higher"
Example:
- Current EUR/USD: 1.1000
- Resistance at 1.1050
- You place Buy Stop at 1.1055
- If price breaks resistance, order triggers
Use For:
- Breakout trading
- Momentum entries
- Confirming strength before entering
Sell Stop
Places a sell order BELOW current price.
Logic: "I want to sell if price breaks lower"
Example:
- Current EUR/USD: 1.1000
- Support at 1.0950
- You place Sell Stop at 1.0945
- If price breaks support, order triggers
Use For:
- Breakdown trading
- Momentum entries
- Confirming weakness before entering
Order Type Summary Table
| Order Type | Placed | Triggers When | Used For |
|---|---|---|---|
| Buy Limit | Below price | Price drops to level | Buy dips |
| Sell Limit | Above price | Price rises to level | Sell rallies |
| Buy Stop | Above price | Price breaks higher | Breakouts up |
| Sell Stop | Below price | Price breaks lower | Breakouts down |
Stop Loss and Take Profit
Stop Loss (S/L)
An order to close your position at a loss to limit downside:
For Buy Positions: Place stop loss below entry For Sell Positions: Place stop loss above entry
When triggered, stop loss becomes a market order and executes at best available price.
Take Profit (T/P)
An order to close your position at a profit:
For Buy Positions: Place take profit above entry For Sell Positions: Place take profit below entry
Take profit orders are limit orders—they fill at your price or better.
Advanced Order Types
Trailing Stop
A dynamic stop loss that follows price:
- Set a trailing distance (e.g., 30 pips)
- If price moves in your favor, stop moves too
- If price reverses, stop stays in place
- Locks in profits while allowing room to run
Example (Buy Position):
- Entry: 1.1000
- Trailing stop: 30 pips (at 1.0970)
- Price rises to 1.1050
- Stop moves to 1.1020 (still 30 pips behind)
- Price falls back, hits stop at 1.1020
- You keep 20 pips profit
OCO (One Cancels Other)
Two orders linked together—when one fills, the other cancels:
Example:
- You're unsure of direction
- Set Buy Stop above resistance
- Set Sell Stop below support
- Whichever triggers first cancels the other
If-Then Orders
An entry order linked to automatic stop loss and take profit:
- Place pending entry order
- Attach SL and TP levels
- When entry fills, SL and TP activate automatically
Order Duration Options
GTC (Good Till Cancelled): Order stays until filled or manually cancelled.
Day Order: Order expires at end of trading day.
GTD (Good Till Date): Order expires on a specified date.
Key Takeaways
- Market orders execute immediately at current prices
- Limit orders enter at better prices (buy lower, sell higher)
- Stop orders enter on breakouts (buy higher, sell lower)
- Always use stop losses to protect your capital
- Trailing stops can lock in profits
- Match order type to your strategy and situation
What's Next?
Learn about forex swaps and how overnight holding costs affect your positions.
This article is for educational purposes only and does not constitute financial advice.