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The Use of Limit Orders on the Foreign Currency Exchange

Foreign Currency Exchange Limit Orders

This article looks at the use of limit orders on the foreign currency exchange.

There are a number of different orders that you can use when you trade on the foreign currency exchange.  One of these orders is the limit order.  It is important that you know about this order and what it can offer you.  There are two ways that you can use the limit order and you need to consider this.  Of course, you should also look at the problems you can encounter when you use limit orders.  There are times when trading on the foreign currency exchange with limit orders are not the best option.

What is a Limit Order?

The first point you need to consider is what a limit order is.  There are two types of limit orders that are commonly used on the market.  The first is the buy limit order and the second is the sell limit order.  The difference between these two orders is what they tell the broker to do with the trade that you have set.  However, both of these orders will tell the broker to only execute the order at a preset price.  The limit order is the order type that you should use to guarantee a trade at a certain price.

The buy limit order will execute when the price reaches the set price or lower.  The sell order will execute when the market price reaches the set order or higher.

The Setting of the Limit Order

When you set a limit order you will not be able to click on the buy or sell butting as you would with a market order.  This order requires more time spent as you are going to have to set the price that the order should be executed at.  The way that you do this will vary depending on the broker that you are going to use.  There are some brokers who make it easy to use a limit order and other brokers who make it hard.

The Benefits of Limit Orders on the Foreign Currency Exchange

There are a number of benefits that you can get with the use of limit orders on the foreign currency exchange.  The first is that you are able to guarantee a price where your order is triggered.  This means that you can set the price and wait until the order is triggered.  If the price that you set is never reached on the market then you will never open the trade.  This can be seen as both a good and a bad thing.

Another benefit of the limit order is that you can use it for part-time trading.  If you do not have the time to stay on the market then you can set the limit order for the price that you want.  If you combine this with protection orders then you will be able to trade while away from the market.

The Problems

There are some problems that you will face with the limit order.  The first is that the order stops negative slippage, but you could still be subject to positive slippage.  This means that you could get a different price for the trade than the one that you want.



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