Using orders

For not sitting twenty-four-hour in front the computer’s screen searching the changes in state of open position traders use such called “orders”. Order – it’s a command for broker to make a buying or selling currency operation in a beforehand pointed price in the moment when the price lever on the market reaches the price lever pointed in the order.

Let’s imagine you have entered into the market when bought the contract with capacity 0,01 (10000) GBP for price 1.8800. And of course you have determined the amount maximum possible loss for yourself, for example $100. Profits or loss we calculate in dollars USA because these values in the end will influence on the capital conveyed in dollars and also we must understand how the result of the deal could influence on the account’s size. Transferring this amount in the points we’ll get 100 points (1 point=$1 in lot 10000 GBP). While reaching with the price the lever 1.8700 we’ll have a loss in 100 points and as a result in 100$. And if the price reaches it, we’ll close the position buying 10000 GBP.  When there is no possibility for being in front of the computer’s screen twenty-four-hour we could send the command for broker for closing the position on the lever 1.8700. The broker getting the order takes an obligation to sell us 10000 GBP at the rate 1.8700 when the price reaches this lever. And though it’ll be very unpleasant for us to get such loss, in the moment of realizing the order we’ll fix our losses and in future we’ll not loss anymore in case of fall in exchange.

The work with orders is associated with topic of trader’s discipline. Before entering the market the trader must perfectly imagine the amount of maximum loss in this or that deal and also understand for what profit he risks. If not considering the possible risk then soon or later the trader will run into the situation when the losses are equal to his deposit and his position will be automatically closed by the broker and on the trader’s account will be zero. Also it should be said that such situation is possible only while using the credit shoulder. In marketing when using only own resources the trader will earn in several times fewer funds, but he “won’t” loss his deposit in any condition on the market, as the currency unlike stocks never can’t be discounted till zero.  

Thereby for increasing the profit and not losing it because of unacceptable losses is very important in time fix the losses and not giving them to high. Usage the order for closed position in case of “incorrect” price movement is highly spread practice for most traders; such trader is called “Stop Loss”.