Placing trades with your broker is the exciting step that you will undertake after you learn FX trading and master the all-important trading techniques and strategies that will help you win in the Forex market. In order to be successful in FX trading, you will have to develop careful analysis techniques that will help you get this right most of the time.
While it is important to learn all the theoretical aspects of Forex trading including the FX trading principles, tactics and approaches when you learn FX trading, it is also important to learn the actual mechanics of the FX trade. This involves the actual placing of orders. Believe it or not, you can actually lose money by failing to master how to successfully place trades in the Forex market.
A typical Forex trade involves certain thought processes. This will begin with an analysis of the market. From the analysis, you will decide on the right currency pair to trade. Next, you will decide on whether you will go long or short and the size of trade that you will place. But this is only a simplified version of the mechanics that is involved in the FX trade. Now let us delve into deeper detail.
Currencies in the FX market are traded in units that are called lots. Depending on the account type that you opt for, you will either trade in standard lots or mini lots. The standard lots will comprise of 100,000 units of a particular currency to be traded. A mini-lot, on the other hand, will comprise of 10,000 units. When you learn about trading FX, you will encounter some of these FX jargon.
When Forex traders have determined what they want to trade and by how much, they can proceed and start an open position. Traders can enter the market in several ways. One option is “at market” which involves buying and selling at the current market prices. The second option is for the trade to open a position at a price that is not the current market price.
When the traders opt for the second position to enter the market, they can choose from a variety of order types. These orders will allow traders to specify the price with which they would like to enter the market while also specifying an expiration directive which is the duration over which the order should remain active. You can educate yourself about these in greater detail when you learn FX trading.
The type of order that a trader places is mainly dictated by the trader’s desired entry price. However, it can also be subject to many other factors such as the limit orders, the stop losses, along with other contingent orders.
The Limit Order
This is used by the traders to enter the market at a position that is more advantageous than the current market prices. It is one of the most popular orders used by traders.
The stop loss orders are used when the traders are entering the market at a position that is not so advantageous. When this happens, the traders will need some confirmation of a price movement before going on to stake out their positions. Traders in such circumstances use stop-orders or stop-loss orders.
If you are looking for additional tips on how to learn trading, check out http://www.knowledgetoaction.com.au.