A “trading platform” allows investors to request the broker/MM for execution of trading prices. In addition the platform allows the investor to control and manage positions. For these purposes, several types of trading orders can be used. An Order is a client’s commitment to broker/MM to execute a trade. The following orders are used in most platforms, Market order, Pending order, Stop Loss and Take Profit.

Market Order
Market order is a commitment to the broker to buy or sell (long or short) a CFD at the current price. Execution of this order results in opening of a trade position. CFDs are bought at ASK price and sold at BID price. Stop Loss and Take Profit orders (described below) can be attached to a market order. Execution mode of market orders depends on the CFD traded.

Pending Order
Pending order is the investors commitment to the broker to buy or sell a CFD at a pre-defined price in the future. This type of orders is used for opening of a trade position provided the future quotes reach the pre-defined level. There are four types of pending orders.

Buy Limit

buy provided the future “ASK” price is equal to the pre-defined value. The current price level is higher than the value of the placed order. Orders of this type are usually placed in anticipation of that the security price, having fallen to a certain level, will increase.

In simple terms, you expect the market to FALL to a certain point and then continue to RISE back up.

Buy Stop

buy provided the future “ASK” price is equal to the pre-defined value. The current price level is lower than the value of the placed order. Orders of this type are usually placed in anticipation of that the security price, having reached a certain level, will keep on increasing;

In simple terms, you expect the market to RISE to a certain point and then continue to RISE.

Sell Limit

sell provided the future “BID” price is equal to the pre-defined value. The current price level is lower than the value of the placed order. Orders of this type are usually placed in anticipation of that the security price, having increased to a certain level, will fall;

In simple terms, you expect the market to RISE to a certain point and then continue to FALL.

Sell Stop

sell provided the future “BID” price is equal to the pre-defined value. The current price level is higher than the value of the placed order. Orders of this type are usually placed in anticipation of that the security price, having reached a certain level, will keep on falling.

In simple terms, you expect the market to FALL to a certain point and then continue to FALL.

ordertypes1

One cancels the other (OCO Order)

An OCO order can only be placed in the SAME market direction. 2 orders are placed, if the 1st order does not catch the market at the specified price then the 2nd order should. If this is the case, the original order will be automatically cancelled. If the original 1st order does initiate the order, the 2nd order will automatically cancel.

Orders of Stop Loss and Take Profit can be attached to a pending order. After a pending order has triggered, its Stop Loss and Take Profit levels will be attached to the open position automatically.

Stop Loss
This order is used for minimizing of losses if the security price has started to move in an unprofitable direction. If the security price reaches this level, the position will be closed automatically. Such orders are always connected to an open position or a pending order. The brokerage company can place them only together with a market or a pending order. Terminal checks long positions with BID price for meeting of this order provisions, and it does with ASK price for short positions.

To automate Stop Loss order following the price, one can use Trailing Stop.

Take Profit
Take Profit order is intended for gaining the profit when the security price has reached a certain level. Execution of this order results in closing of the position. It is always connected to an open position or a pending order. The order can be requested only together with a market or a pending order. Terminal checks long positions with BID price for meeting of this order provisions, and it does with ASK price for short positions.

Attention:

Actual execution prices for all trade operations are defined by the broker;

Stop Loss and Take Profit orders can only be executed for an open position, but not for pending orders; IT IS VERY IMPORTANT THAT TAKE PROFITS AND STOP LOSSES ARE USED IF TRADES ARE TO BE LEFT RUNNING UNSUPERVISED, FAILURE TO DO THIS COULD END WITH SEVERE LOSSES. REMEMBER, IF YOU DO NOT USE A STOP LOSS THE BOTTOM OF YOUR INVESTMENT/DEAL, IS THE BOTTOM OF YOUR ACCOUNT.

The next paragraph explains how some traders become confused that their market orders were not captured. It is important to remember that some trading platforms only show the “BID” price. Some actually show a varying size line the actual size of the spread, in effect showing both “BID” & “ASK”

History charts are drawn only for BID prices in the terminal. At that, a part of orders shown in charts is drawn for ASK prices. To enable displaying of the latest bar ASK price, one has to flag the “Show Ask line” in the terminal settings. Some traders may become confused that their order was not executed at the requested price, it is important to remember that they may have been executed at the ASK price which may in fact not have been triggered. The previous paragraph explains how some traders become confused that their market orders were not captured. It is important to remember that on some trading platforms only show the “BID” price.

To see both the BID and the ASK price on any chart, the investor has to select from the “properties” of the chart.