Trading Order Types
Also called a Trailing Stop-Loss, a Trailing Stop Loss is a special type of trade order. Not set at a single, absolute Dollar amount, the Stop Loss is set at a certain percentage or a certain dollar amount below the market price. Once the price goes up, it takes the Trailing Stop with it. Once the price ceases to rise, the Stop-Loss price remains at the level it was brought to. A Trailing Stop ensures that the trader is protected from the downside of an investment as he or she is locked in on upside.
The specific types are discussed below:
Market Order signals the client when he or she can buy or sell a financial tool within the current market price. The price of the trade is specified in the market order window or through phone at the price given by the dealer.
Through the market order window, the client places the maximum allowable price deviation of order execution based on the requested price. Should prices change unpredictably, the position opening will be performed in the following ways:
Should the present market price exceeds the deviation, the client will be given a new market price. The client may then accept the new price for the order to be lodged.
If it stays within the deviation, the position will be opened at the specified market price.
This refers to a client’s command to open a trading position at a price that departs from the current market price.
Types of Pending orders:
Buy Limit – a buy order at a price going below the current market price.
Buy Stop – a buy order at a price exceeding the current market price.
Sell Limit – a sell order with a price exceeding the current market price.
Sell Stop – a sell order at a price below the current market price.
The market price reaching the price of the order means a deal of buying or selling is triggered. The Sell Limit and Buy Limit orders may be executed at either the price specified by the client or at an even better price. Sell Stop and Buy Stop orders are executed at the price determined by the client. Orders will not be executed during price gaps, when the order can be made at the first price specified in the market.
Linked Limit and Stop Orders
In an open position or a pending order, there are two (2) main types of orders: the Stop Loss and the Take Profit
The Stop Loss order limits possible losses and with a price worse than the opening position or pending order execution price.
Take Profit closes a position by reaching the targeted level of profit. The Take Profit has a better price compared to position opening or pending order execution price.
Once the price equals what was set on the linked Stop Loss or Take Profit order, the position automatically closes.
Linked stop loss and take profit orders are automatically removed when the position is closed or the pending order is cancelled.
Take Profit order is executed at a price determined by the buyer or at an even better price.
A Stop Loss order is launched at a price determined by the client. The only exception is when there are price gaps, when the order is executed with the first price specified by the market.
OCO – One Cancels Other (only in the trading platform NetTradeX)
An OCO order are two pending orders combined that opens a position at prices departing from the present market price. The execution of any of the two orders automatically removes the other.
The Pending Order Execution policy is applicable to OCO orders.
The Activated Order is a pending order set once the level of activation is reached. The Pending Order execution policy is meant for activated orders. On the MetaTrader 5 platform, the Buy Stop Limit and Sell Stop Limit are its counterparts for activated orders.
How to Set Trailing Stop
The Trailing Stop mode maintains how an automatic shift of a linked Stop Loss order works according to the following rules:
Should the profit of a position exceed the fixed distance, the Stop Loss order moves to the level wherein the distance is equal to the difference between the current market price and the order price.
If in case no Stop Loss order has been placed, but the Trailing Stop mode was, the Stop Loss order is set automatically at the position opening price when the profit reaches the same level as the distance.