Tradestation forex order types

The purpose of a stop-loss order is to either buy or sell when a stock achieves a certain price, which helps you minimize your risk. A stop and reverse order is used when a trader wants to quickly reverse their position. These orders are placed with a broker to take a certain action, either buy or sell when a stock achieves a certain price.

You can place them in advance to limit your risk if a price tanks at a time when you're unaware of the shift. Your associated risk is correlated with the stop loss price you set. For example, if you place a stop-loss order at 20 percent less than what you paid for the stock, the most you'll lose on that investment is 20 percent.

Compare this to the other alternative. The stock tanks to 50 percent below what you paid for it without your knowledge so you have no opportunity to act and sell to mitigate your loss. Stop and reverse orders are effectively an extension of stop-loss orders. They're used when a trader wants to quickly reverse his position, hence the name. For example, if a trader is in a long trade and he wants to exit that long trade and enter a short trade at the same price, he would use a stop and reverse order.

The same task could be accomplished manually, of course, by placing an exit order then following that up by immediately placing an entry order, but stop and reverse orders are obviously more streamlined and efficient because they combine the entry and exit and all that activity into a single order. Key Principles We value your trust. Our mission is to provide readers with accurate and unbiased information, and we have editorial standards in place to ensure that happens.

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A stop entry order is an order placed to buy above the market or sell below the market at a certain price. Notice how the green line is above the current price. If you place a BUY stop order here, in order for it to be triggered, the current price would have to continue to rise. Notice how the red line is below the current price. If you place a SELL stop order here, in order for it to be triggered, the current price would have to continue to fall.

As you can see, a stop order can only be executed when the price becomes less favorable to you. You believe that price will continue in this direction if it hits 1. You can do one of the following to play this belief: Sit in front of your computer and buy at market when it hits 1.

Stop Loss Order An order to close out if the market price reaches a specified price, which may represent a loss or profit. A stop loss order is a type of order linked to a trade for the purpose of preventing additional losses if the price goes against you.

If you are in a long position, it is a sell STOP order. If you are in a short position, it is a buy STOP order. A stop loss order remains in effect until the position is liquidated or you cancel the stop loss order. To limit your maximum loss, you set a stop loss order at 1. Stop orders may be triggered by a sharp move in price that might be temporary. If your stop order is triggered under these circumstances, your trade may exit at an undesirable price.

If triggered during a sharp price decline, a SELL stop loss order is more likely to result in an execution well below the stop price. If triggered during a sharp price increase, a BUY stop loss order is more likely to result in an execution well above the stop price. Trailing Stop A stop loss order which is always attached to an open position and which automatically moves once profit becomes equal to or higher than a level you specify. A trailing stop is a type of stop loss order attached to a trade that moves as the price fluctuates.

This means that originally, your stop loss is at If the price goes down and hits Just remember though, that your stop will STAY at this new price level. It will not widen if the market goes higher against you. Your trade will remain open as long as the price does not move against you by 20 pips. Once the market price hits your trailing stop price, a market order to close your position at the best available price will be sent and your position will be closed.

Limit Orders versus Stop Orders New traders often confuse limit orders with stop orders because both specify a price. The difference lies in the purpose of the specified price. A stop order activates an order when the market price reaches or passes a specified stop price. Once the price reaches 1. Basically, your order can get filled at the stop price, worse than the stop price, or even better than the stop price.

It all depends on how much price is fluctuating when the market price reaches the stop price. Think of a stop price simply as a threshold for your order to execute. At what exact price that your order will be filled at depends on market conditions. A limit order can only be executed at a price equal to or better than a specified limit price. Your order will not be filled unless you can get filled at 1.

Think of a limit price as a price guarantee. By setting a limit order, you are guaranteed that your order only gets executed at your limit price or better. The catch is that the market price may never reach your limit price so your order never executes. Your broker will not cancel the order at any time. Therefore, it is your responsibility to remember that you have the order scheduled.

Think of it as a special instruction used when placing a trade to indicate how long an order will remain active before it is executed or expires. Two orders are placed above and below the current price. When one of the orders is executed the other order is canceled.