Order types
Pick the right order for each scenario.
Lesson path
Market Foundations + Forex Mechanics
The Basics
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Pick the right order for each scenario.
Orders are instructions
An order is an instruction you send to your broker. A market order says: fill me now at the best available price. It is useful when the market is liquid and you care more about getting in than getting an exact price. During news, market orders can slip, which means your fill can be worse than the price you saw.
A limit order says: execute only at this price or better. If EUR/USD is above your planned buy level, a buy limit lets price come to you instead of chasing. A stop order says: execute if price reaches this level or worse. Stop orders are used for stop-losses and also for breakout entries.
A stop-limit order is a stop order that becomes a limit order after the trigger. It protects you from filling at any price, but it creates a new risk: no fill if the market moves too fast. A trailing stop is a stop that moves with price in your favor. Brokers offer different names and variants, but the basic math is the same.
Recap: market for immediate execution, limit for price or better, stop for trigger-based execution, stop-limit for controlled price with no-fill risk, trailing stop to follow favorable movement.
Knowledge check
Answer before moving on.
1. Which order type executes immediately at the best available price?
2. Why can market orders be risky during major news?
3. Which order is best if you only want to buy at your level or cheaper?
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