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How buy and sell orders work

An order is the instruction that you as a trader sends to your currency broker where you instruct how the asset you are interested in will be traded on the market. In this list we will mention some of the most common order types, go through them and explain how they work.

MARKET ORDER

A “market order” is the simplest order type and means that you instruct your currency broker to buy the asset you are interested in immediately at the best available price during that time which the order is executed. When you send a “Market order” it means that your order will be guaranteed. This means that you almost always pay the current listed market price. Except in some specific situations, an example is if it occurs during periods of high volatility, then it is possible that the price may deviate from the current market price. When that happens, your order will get a so-called slippage that shows the difference between the market price and the course you are actually trading on.

BUY STOP ORDER

A “Buy Stop Order” is a common order type when you want to protect yourself from excessive losses. When you place a “Buy Stop Order”, you instruct your currency broker to buy when / if the currency pair is trading over the current market price, this means that you buy it if the currency pair increases in value in relation to the value prevailing at that time when you place the order.

BUY LIMIT ORDER

A “Buy Limit Order” instructs your currency broker to buy when / if the currency pair is trading below the current market price, ie you buy if the currency pair decreases in value in relation to the value that prevails at the time you place the order. This means that While the price is guaranteed, the filling of the order is not.

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