Examples of Transactions


Limit Order

Limit orders, also called “price orders”, allow the trader to predetermine a price at which they want to sell or buy a current position (depending on the initial opened position). Limit orders allow the trader to set predefined values where they would like to take a profit on a trade or open a position at a more favorable rate than the current price without constantly having to watch the market.

Example of a Limit Order

A trader buys (long) 100,000 GBP (1 standard lot) against USD at a market/spot price of USD $1.9988. The trader believes the GBP will appreciate to USD $2.0010, thus he places a limit order to sell 100,000 GBP at USD $2.0010. The sell limit order placed by the trader will be executed once the exchange rate reaches the prices of $2.0010.

Stop Loss Order

Traders utilize stop loss orders to limit trading losses and are an essential element to managing risk potential. Using stop loss orders allows the trader to automatically close a position if the market moves against them, limiting their losses to a certain point.

Unlike limit orders, stop orders do not guarantee execution at the rate the order is set. Once the stop loss level has been reached or passed, the order will be filled at the next available market rate.

Example of a Stop Loss Order

A trader buys (long) 100,000 GBP/USD (1 standard lot) at a market/spot price of $1.9988. The trader believes the GBP will appreciate against the US dollar; however, the trader wants to limit potential losses in case the market moves against the trader and places a stop loss order to sell (short) 100,000 GBP/ USD at $1.9900 thus limiting losses if the GBPUSD depreciates to $1.9900 or below.

One Cancels Other Order

One Cancels Other orders (OCO) are placed by the trader who wants to place either a Buy/Sell Limit order or a Buy/Sell Stop loss order but not both to be executed. It is the combination of both a limit and a stop order and can be used to take profit if the market moves in favor of the trader or to limit loses if the market moves against the trader. OCO orders are advantageous if the trader wants to get in and out of the market without having to watch it constantly.

Example of a One Cancels Other Order

GBP/USD is trading at USD $1.9988, and the trader has an open long (buy) GBP/USD position which was opened at $1.9938. The trader wants to close the position and take a profit if the price goes up to USD $2.0038, or if the market moves against the position, and limit his losses and be stopped out at $1.9888. The trader would place a Sell at USD $2.0038 on limit OCO USD $1.9888 on stop. Whichever order is executed first cancels out the other order automatically.