Every CFD trader should be aware of the price action trading as it affects the decisions of all the currency exchange investors. The price chart represents the movement of the currency at different times or periods. One may find the support/resistance line, and price action patterns quite complicated, but there are different kinds of trading orders that are common and easy.

Common types of trading order

There are three main trade deals in the CFD industry –

1.      Market order

Investors execute the trade at the current market price and this type of trade placement is called market execution. When an investors places the trade, there is always a risk because he can’t predict the fluctuations of the price. For the larger deals, it becomes a real headache for them.

2.      Pending order

An investor places his limit order with a limited price after entering a trade. Many people become confused with this and the market execution. In a limit order, you have to place the limit beneath or above the price. You set the sell order at a higher price and the long trade in a lower price. The limit orders allows the investors to get precise price in trade executions. To improve your execution process, you can learn this technique in demo platform. Try it out here since many Singaporean traders have mastered this technique by using Saxo’s demo account.

3.      Stop order

It becomes easier to understand when an investor acquires the basic knowledge about limit and market order. The stop order is regarded as the provisional market order. While entering a trade, the stop limit value is placed over the actual price, and the sell order is placed beneath the actual value. If the graph hits the determined limit, the trade should be executed as soon as possible. Remember that – when the currency’s price hits the stop limit, the stop order will become the market order.

Entry techniques of price action business

To simplify the entire discussion, the stop orders are determined for the break-outs, and the limit orders are determined for vanishing them.

1.      Break-out deals – stop orders

Break-outs take places when there is a sudden change in the continuous movement. At this period, the traders are recommended using stop limits. For example, in the case of a bearish movement, a businessman may place the sell stop limit below the downtrend inside bar. The stop order will be triggered after the platform changes its movement below the bar.

There are multiple benefits of using stop orders – it will ensure the confirmation, and you can efficiently execute the trade. These orders are triggered when there is a break-out, and an investor can enter the business with full confidence. If there is no confirmation, it will be better to avoid that deal.

If a businessman waits for the break-out before jumping into a trade order, then he may face a massive slippage. But, by placing a stop order, he can turn that one into another limit, which can be executed at that time.

2.      Exit the trades – Limit orders

If a businessman thinks that the price may take a reverse direction after there is a break-out, it will be a wise decision to use the limit orders. When the business has a strict range of fluctuations, then it will be ideal to use the limit orders. If the businessman fails to do this, he may face a massive crash.

One must acquire advanced knowledge to enter the trade with confidence by using limit orders. Since the reversal business is always deceptive, using the limit orders can be useful in the reverse market.

Professionals always state that the Forex traders should use the stop orders when there are break-out and limit orders when there is a break-out failure. Currency exchange businessmen should include these orders in their strategies to make a perfect entry and exit point while trading.