There are different MT4 order types like buy stop, sell stop, sell limit, buy limit, market buy order and market sell order. These can be quite challenging especially if you are just starting out. This post will explain them clearly so that you know how to use them in your trading.
Here you will learn to understand the differences between limit and stop orders in forex.
Types of MT4 orders
There are 2 Main Types of MT4 orders:
- Pending orders (4 types: buy stop, sell stop, sell limit, buy limit)
- Market Execution Orders ( buy by market, sell by market)
1. Market Execution Orders: A market order is an order that is placed ‘at the market’ and it’s executed instantly at the best available price. In other words, you buy or sell the market at the current prices. You use this kind of order when you use one-click trading in MT4.
2. Pending or Limit Entry Orders: A limit entry order is placed to either buy below the current market price or sell above the current market price. This is not executed immediately but waits for the price to reach a predetermined level.
As you can see, we can further break this down to limit orders and stop orders. Lets look at each of these types in depth.
MT4 Limit Orders
We have 2 types of limit orders
- Buy limit and;
- Sell limit
1. Buy limit orders
A buy limit order is a pending order that is placed below the current market price with the hope that price will fall down, hit it, activate it (get you in the trade) and head back up. In other words, its like a bounce.
Sell limit Order
A sell limit order is a pending order that is place above the current price of the market in the anticipation that price will head up to it, hit it and activate it and go back down.
MT4 Stop Orders
We have two types of mt4 stop orders:
- a sell stop orders;
- buy stop orders
Sell stop orders
A sell-stop order is a pending order that is placed below the current market price in anticipation that the price will fall down, activate it and continue falling down.
Buy stop orders
A buy-stop order is a pending order that is placed above the current market price in the anticipation that the price will rise up, hit it, activate it and then continue rising up. In other words, it is used when you expect resistance to be broken.
By now you should understand the differences between these MT4 order types. You should be able to choose the right order type for whatever strategy you are going to use.
You can learn more forex terms in the glossary.