fbpx

Forex Basics 4 – Steps To Trade Forex (positions, buying, selling, buy stop, sell limit)

blank

If you want to make a profit in the foreign exchange market, you have to place an order. The following article describes the types of trading orders in the foreign exchange market and the operation of buying and selling orders.

The principle of “long order” and “short order” in foreign exchange transactions

Transactions in the foreign exchange market fall into two categories, namely buy or sell orders, to buy low and sell high. If you think the market will be bullish, then place a buy order (commonly known as long), buy low-cost currency from the bank, and sell the currency at a high price after its appreciation. If you feel the market is weak, then place a sell order (commonly known as short), sell the currency to the bank, and buy it back at a low price after its depreciation. The difference between these transactions is your profit or loss.

A ‘position’ is the term used to describe a trade in progress. A long position means a trader has bought a currency expecting its value to increase. Once the trader sells that currency back to the market (ideally for a higher price than he paid for it), his long position is said to be ‘closed’ and the trade is complete.
short position refers to a trader who sells a currency expecting its value to decrease, and plans to buy it back at a lower price. A short position is ‘closed’ once the trader buys back the asset (ideally for less than he sold it for).


Transaction type

Market Order

A market order is an order to buy or sell in real time at the best available price on the market.

For example, EUR / USD EUR / USD now has a BUY price of 1.2400 and a SELL price of 1.2410.

If you currently execute a Market Order-Buy operation, you will place an order at 1.2410 to establish a buy position. If you place an order now, you will close the position at 1.2400.

Conversely, if you currently execute a Market Order-Sell operation, you will place an order for 1.2400 to establish a sell position. If you place an order now, you will close the position at 1.2410.

* Note: The buying and selling price of a currency pair is the price at which the bank bought or sold you

Limit Order

A Limit Order refers to the price at which you want to buy or sell a currency on the market, usually an order sold above or below the market price; when the currency rises or falls to the price of your order The system will trade immediately.

For example, EUR / USD EUR / USD is now 1.2400 / 1.2410

If you think this currency pair will rebound and rise after a slight decline, you can set a buy limit order (BUY LIMIT) of 1.2300. When the EUR / USD exchange rate really drops to 1.2300, the system will immediately Execute a buy order.

Conversely, if you think the upward momentum of this currency pair will stop and fall back, you can set a sell limit order of 1.2500 (SELL LIMIT). When the EUR / USD exchange rate really rises to 1.2500, the system will The sell order is executed immediately.

 

Stop Order

A Stop Order is similar to a Limit Order in that they are placed at a certain price in the future. The difference between them is that stop loss orders will be bought above the market price or sold below the market price.

For example, EUR / USD EUR / USD is now 1.2400 / 1.2410

If you think that this currency pair will continue to rise after breaking a certain price, you can set a buy stop order of 1.2500 (BUY STOP). When the EUR / USD exchange rate really rises to 1.2500, the system will immediately Execute a buy order.

Conversely, if you think the downward trend of this currency pair will continue, you can set a sell stop order of 1.2300 (SELL STOP). When the EUR / USD exchange rate really drops to 1.2300, the system will execute immediately Sell orders.

* Note: When the system executes limit or stop-loss orders, the price of open positions and pending orders may be slightly different in the rare case of price limit fluctuations or the Black Swan event.

blank