Lesser Known Trading Orders That Your Forex Broker Accepts

There are a wide variety of orders that your forex brokers can accept beyond the basic Market and Limit orders that you are undoubtedly familiar with. Understanding how to use them can greatly enhance the effectiveness of your trades.

•    One cancels the other (OCO). In this type of order, one of your limit orders is executed while the other is automatically cancelled depending on the conditions you’ve set and the prevailing market conditions.  To illustrate how this works, let’s say you’re trading the EUR/USD currency pair and the exchange rate is currently at 1.9850.  You set your limit buy order at 1.9855. However, you can also profit if the price falls below 1.9850 so you set another limit sell order at 1.9845. If one or the other trigger level is reached, one order will be executed while the other is cancelled, creating an OCO situation.

•    Cancel/Replace. This is not an order but a procedure of adjusting your orders in reaction to changing market conditions. To illustrate, let’s look at the example above. You set a stop/loss order at 1.9846. But let’s say the market remains bullish and you decide that you want to lock in more profit. So you cancel your original stop/loss and replace it with a new one at 1.9865. You can keep using the cancel/replace order to adjust your stop/loss orders until you exit the trade.

•    You can also tell brokers how long you want your orders to be effective by adding GTC and GFD orders. GTC stands for Good Till Cancelled and means that the order will be active until the conditions set are met or you manually cancel the order. For example, if you have a Limit order to buy euros at 1.9855, it will continue to be active as long as the euro has not yet reached that level or you tell the broker to cancel the Limit order. This type of order can be useful if you want to enter a position on the euro but are waiting for the right time. On the other hand, if you forget about the order, you might be surprised if it suddenly is executed, so you should always be aware of which orders are under GTC status. On the other hand, GFD means Good For Day and means that the order will only be effective until the end of the business day. Hence, your orders with GFD status will automatically be cancelled as part of the broker’s end of day processing duties.


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