CHOOSING A FOREX MARKET STRATEGY
Getting started in the Forex market can be quite difficult, because a trader has to learn a lot of information, to get new skills – choosing a Forex strategy, choosing an indicator, a currency pair, a time period, requires certain practices and knowledge. That is why experienced traders advise beginners to first carefully examine and consider everything, and then work on a training account, having received at least a minimum of practical skills.
Forex terminology highlights such a notion as a warrant in trade. You can make a sale / purchase of a currency on the market either by requesting a quote, giving Sell or Buy commands, or by placing orders — certain sales / buying orders of a specific currency according to the rate you selected in advance. Orders can be of two types: it is a stop order (Stop Order), a limit order (Limit Order), sometimes referred to as Stop Loss, Stop Profit, Take Profit.
Stop Order – an order to complete a transaction (opening a position) at a less favorable rate compared to what is observed on the foreign exchange market at the time of placing the order. Stop is used to limit possible losses or to fix a part of the profit on an already open position in case the course starts moving in the opposite direction. Also, a forex stop order is used to open new positions when a course is broken through a specific level.
Limit Order – this is the name of an order to make a transaction at a rate that is more profitable than what is on the foreign exchange market at the time of placing the order. The limit is used to record profits or losses in case the movement of the course is unfavorable. Also limit order is used to open a new position.
As experienced traders and Forex books tell beginners, when placing a pair of orders (stop and limit), this pair can be assigned a CCA attribute (the abbreviation for “one replaces the other” – One Cancels Other). In this case, if one order is executed, the second will be canceled automatically.
According to Forex analytics, orders may also have the GTC feature (“valid until canceled” – Good Till Canceled). An order with such a sign is obligatory for execution until the client cancels it. Day order can also be used – automatically canceled at the end of the trading day. Considering that when working on Forex, only the GTC order is most often used, this feature is considered to be the default. To the usual stop / limit order can be added one or several orders in idle mode If Done, which will not be executed until it is executed the main one.
When making a choice of Forex strategy, indicators, technical means, a trader must possess knowledge of trading, performing basic tasks and processes – only in this case he will be able to succeed.