Managing Risk

Managing Risk

What Is Fundamental Analysis

Orders are critical tools for any type of trader and should always be considered when executing against a trading strategy. Orders can be used to enter into a trade as well as, help protect profits and limit downside risk.Understanding the differences between the order types available can help you determine which orders best suit your needs and are best suited to help you to reach your trading goals.

Market

A market order is the most basic order type and is executed at the best available price at the time the order is received.

Limit

A limit order is an order to buy or sell at a specified price or better. A sell limit order is filled at the specified price or higher; buy limit orders are executed at the specified price or lower. Limit orders allow you the flexibility to be very precise in defining the entry or exit point of a trade. Keep in mind that limit orders do not guarantee that you will enter into or exit a position, because if the specified price is not met, you order will not be executed.

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Stop

A stop order triggers a market order when a predefined rate is reached. A buy stop order triggers a market order when the offer price is met; a sell stop order triggers a market order when the bid price is met. Both stop orders are executed at the best available price, depending on available liquidity. Stop orders, also called stop loss orders, are a frequently used to limit downside risk

Stop orders help to validate the direction of the market before entering into a trade. It’s important to keep in mind, that stop orders are executed at the best available price after the market order is triggered, depending on available liquidity.

Trailing Stop

A trailing stop is a stop order that is set based on a predefined number of pips away from the current market price. A trailing stop will automatically trail your position as the market moves in your favor. If the market moves against you by the predefined number of pips, then a market order is triggered and the stop order is executed at the next available rate depending on liquidity.

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