What types of orders can you place in forex?

An order is an instruction to your broker to buy or sell a pair at a size you choose. The order type decides when the trade happens and which prices you will accept.

Every order uses the two prices from the bid and ask lesson. Buy orders fill at the ask and sell orders fill at the bid. The examples here use EUR/USD with an illustrative bid of 1.10000 and ask of 1.10010.

What does a market order do?

A market order buys or sells straight away at the best price available. Click buy on EUR/USD and you get the ask, about 1.10010 in this example. Click sell and you get the bid, about 1.10000.

You choose the size and the direction. The price is whatever the market offers when your order arrives, and in a calm market that is usually at or very close to the price on your screen.

In a fast market the price can change between your click and the fill. The difference is slippage, and it can go for you or against you.

On some account types the platform may instead show you a new price to accept or refuse, which is called a requote.

Closing a trade by hand is a market order too, in the opposite direction. You close a buy by selling at the bid, and a sell by buying at the ask.

How do pending orders wait for your price?

A pending order waits on the broker's server until price reaches a level you set, and then it opens a trade. There are two families, limit and stop, and each has a buy and a sell version.

Limit orders wait for a better price

A limit order asks for a better price than the current one. A buy limit sits below the market, since buying cheaper is better. A sell limit sits above the market, since selling higher is better.

Say you like EUR/USD but think 1.10010 is too expensive. A buy limit at 1.09700 opens your trade only if the ask falls to 1.09700, and if price never gets there, the order simply waits.

Stop orders join a move

A stop order works the other way round. A buy stop sits above the market and a sell stop sits below it. You use one when you want to trade only if price shows it is moving in that direction.

Suppose you want to buy only if EUR/USD breaks above 1.10300. A buy stop at 1.10300 stays idle until the ask reaches that level. Then it becomes a market order and fills at the next available price.

A sell stop at 1.09700 does the same for a fall: it sells once the bid drops to 1.09700.

Which price triggers the order?

On MetaTrader and most similar platforms, buy orders watch the ask and sell orders watch the bid. A buy limit at 1.09700 triggers when the ask touches 1.09700, and at that moment the bid reads about 1.09690.

Charts usually draw the bid, so a buy limit can look as if price touched it and did not fill. Price had to fall by one more spread before the ask arrived.

A triggered limit order fills at your price or better. A triggered stop order becomes a market order, so it can fill at a worse price than the one you set.

Brokers can also set a minimum distance between the current price and a new pending order, often called the stops level. You will find it in the contract specification for each instrument, and on some accounts it is zero.

How do stop loss and take profit close a trade?

Pending orders open trades, and two more order types close them.

A stop loss closes your trade if price moves against you to a level you choose. A take profit closes it once price reaches your target. You can attach both to a market or pending order and move them later.

Both are exit orders, so they watch the price you would close at. On a buy trade they are sells and watch the bid.

On a sell trade they are buys and watch the ask. The lesson on why to use a stop loss covers where to put one.

Here is the buy limit from earlier as a full plan, with illustrative prices. A pip on EUR/USD is 0.0001.

1. With the bid at 1.10000 and the ask at 1.10010, you place a buy limit for 0.10 lot at 1.09700.
2. On 0.10 lot, which is 10,000 euros, one pip is worth 10,000 × 0.0001 = $1.
3. You attach a stop loss at 1.09400 and a take profit at 1.10300.
4. The ask falls to 1.09700 and your trade opens there.
5. If the bid later falls to 1.09400, the stop loss sells. The loss is 1.09700 minus 1.09400 = 0.00300, which is 30 pips, or $30.
6. If the bid rises to 1.10300 first, the take profit sells. The gain is 1.10300 minus 1.09700 = 0.00600, which is 60 pips, or $60.

The spread is already inside both numbers, because you entered at the ask and leave at the bid. The profit and loss calculator repeats these sums for other pairs and sizes.

Why can a stop loss fill at a worse price?

A stop loss is a stop order, so once it triggers it becomes a market order. It fills at the first price available, which is usually close to your level but carries no promise.

The biggest misses come from gaps. The market closes for the weekend, and news before it reopens can put the first new price far from the last old one.

Take the same trade, with Friday ending at a bid of 1.09500, above your stop. Monday opens with the bid at 1.09250. No price between those two ever traded, so the stop at 1.09400 fills at 1.09250.

The loss is now 1.09700 minus 1.09250 = 0.00450, which is 45 pips, or $45 on 0.10 lot. You had planned to risk $30.

Limit orders usually fare better in a gap. A take profit is a limit order, so if price gaps past it in your favour, it normally fills at your level or better.

Some brokers offer a guaranteed stop loss for an extra fee, which closes at your exact price even through a gap. Availability and cost vary, so read your broker's terms.

Which other order settings will you meet?

Expiry

A pending order stays active until it fills or you cancel it, unless you give it an end time, such as the close of the day. A forgotten order can open a trade weeks later, so check your list of pending orders often.

Trailing stop

A trailing stop is a stop loss that follows price at a fixed distance when the trade moves your way. With a 30 pip trail on the buy above, a bid of 1.10100 lifts the stop to 1.09800, and it never moves back down.

In MetaTrader the trailing stop runs inside your platform, so it stops following price while the platform is closed. The stop level it has already reached stays on the broker's server. The trailing stops lesson covers how to choose the distance.

Stop limit

MetaTrader 5 adds buy stop limit and sell stop limit orders. A buy stop limit waits for the ask to reach a stop price, then places a buy limit at a lower price you chose.

For example, a stop at 1.10300 with a limit at 1.10250 places a buy limit at 1.10250 once the ask hits 1.10300. You never pay more than 1.10250, and the trade opens only if price pulls back to that level.

The order types cheat sheet puts every order in this lesson on one page.