One of the first things you’ll need to learn about FX trading is the difference between instant orders and pending orders. You may need to initiate either of these types of order throughout your trading life, whether you’re trading independently or following forex signals.

Instant Orders

Instant orders are forex orders that are immediately opened. They can be either a buy or a sell for any currency pair and they are initiated based on the current ask or bid prices. An instant order is often initiated by those who are currently tracking and analyzing their currency pair, but it requires a very good sense of timing on behalf of the trader.

BUY STOP = Order placed ABOVE price and keeps going UP
BUY LIMIT = Order placed BELOW price and price then goes up
SELL STOP = Order placed BELOW price and price keeps going DOWN
SELL LIMIT = Order placed ABOVE price and then goes DOWN

With instant orders, it’s always a good idea to have a stop loss in place; there are even traders who do not set take profits that will usually have either a stop loss or trailing stop. This is because the market can shift faster than the trader can react.

Pending Orders

Not all forex orders will be immediately opened. Traders that are following forex signals or who have more sophisticated strategies will often put in trades that have more complex patterns and that are intended to initiate at a certain time.

On the popular MetaTrader 4 platform for instance, pending orders are initiated in nearly the same way as instant, they simply have additional requirements written in when defining the trade. Also, while an order is still pending, it can be modified as desired by the trader, or it can be canceled entirely without any penalty to the account.

Be sure to take note, that opening a pending trade order with a set price for buy or sell can skip a trade entirely, if those exact conditions aren’t met.

Here are a few definitions that you should know when dealing with pending orders:

Which Type of Forex Order is for me?

Deciding whether to initiate a pending order or an instant order will depend on the trading strategy that you are using. Some traders initiate only instant orders because they are trading live; they are watching the market signals actively and deciding when they should buy or sell. While this is legitimate, it also requires a lot of attention and work; the trader simply cannot look away because the forex market operates too quickly. On the other hand, pending orders give a trader flexibility, the capability to strategize, and to plan their trading activity more accurately.

So, to round up…

Pending trade orders are what you should use if you want to initiate trades based on specific market prices. If you are using forex signals, looking to implement a trading strategy, this is the way to go.

Instant trade orders can be better suited to the more proactive trader — looking to trade based on current market price.

Choosing a type of forex order will depend on your own trading strategy, your risk tolerance, and ability to monitor the market.

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